Imbalance between capital and technical assistance

International assistance takes three forms: financial aid, technical assistance and access to markets. A serious imbalance in these three complementary forms of aid undermines the effectiveness of any of them taken individually.

Much of the aid administered by the United Nations Development Programme is concentrated in capital investment. Only about 20% goes toward technical assistance for developing the human and institutional infrastructures required to support such lending on a practical basis. Of the World Bank loan commitments in 1982, about 11% were applied to technical assistance. The insufficiency of technical assistance is in the range of one-half; that is, technical assistance funding needs to be doubled if strictly capital investments are to be better secured and social development forwarded.

In the assistance to eastern Europe since 1989, the financial assistance has been predominantly debt-creating with many of the transition countries most in need receiving the least amounts of help, and with both financial and technical assistance poorly monitored and weakly coordinated. Access to western markets for eastern exports greatly increased from 1989 but the security of this improvement was thrown into doubt by the upsurge of western protectionist action against selected imports from the transition economies. The inability to move quickly on all three fronts was seen as encouraging growing pessimism and disillusion in large sectors of the population in the transition economies.