Bored & Confused: Is foreign aid helpful?

Foreign aid, in the modern sense, has meant government to government transactions in which the United States gives a huge amount of relief supplies to countries in need.  According to Professor Angus Deaton of Princeton University, “$134 billion of official aid still flows from donor governments to recipient governments.” However, all of this “aid” is almost never put into action with the consent of the people of the recipient nation, and is therefore inherently anti-democratic. That aid often does more harm than good, corrupting the recipient state and inhibiting their ability to develop strong institutions of their own.

The majority of aid rarely reaches the poorest sectors of the region. Today, poverty is not the result of lack of resources. Poverty is caused by corrupt institutions and poor governance, perpetuated by foreign aid.

The mantra of foreign aid embodies the conception that developed nations must take it upon themselves to save those less fortunate. Singed with undertones of colonialism, this philosophy is often more harmful to recipient nations than helpful. First, in a rejection of the traditional idea that the key to triggering growth is to throw money into a country's roads, industry, and infrastructure, Professor William Easterly of NYU found that lots of foreign aid flowing into a nation actually led to lower economic growth and vice-versa. Second, by trying to help poor people in poor nations, rich countries often end up corrupting those countries and stymieing growth. This happens because as aid flows into a nation, the government becomes less accountable to its people, instead relying on outside powers for legitimacy. Further, foreign aid undermines a country’s ability to develop strong institutions and accountable government in the first place, key to a nation’s developmental success.

Finally, foreign aid is often used for the benefit of rich nations themselves rather than for the nations and people in need. Countries like the United States use aid to support our allies, investments or political beliefs rather than the interests of the local people.

The most notable example of this is the U.S. support of the despotic Ethiopian government in exchange for their suppression of Islamic fundamentalism. Rich nations also benefit economically from foreign aid  before any long-term growth from the recipient nation. For every $1 of aid donated from rich countries to poor countries, $7-10 returns to rich countries, due to debt repayment, interest and capital flight. The UN Conference on Trade and Development estimates that there has been a net transfer of $200 billion from poor countries to rich countries — not ideal development conditions.

If foreign aid is not the answer to global poverty, then what is? First, we should begin by selling fewer weapons to despots, and ensure that developing countries get a fair deal in trade agreements and relax trade barriers. We should also invest in developing vaccines for global diseases, such as malaria. It took western nations 200 years to reach the level they are at today, while we expect today’s developing nations to do so in about a decade or even less. The answer is not foreign aid, rather we must let countries find their own path to success, at their own pace.