Does foreign aid really aid the poor?

Myanmar, Burma. Mandalay Street Scene. Vegetables and fruits for sale in the market.

Foreign aid is no solution for world poverty, as evidenced by a recent Institute of Economic Affairs publication, ‘The Economics of International Development’. It found that, on average, foreign aid has “no effect on long–run growth”. Instead of focusing on provisions for the poor, which often thwart local businesses and lead to dependence, the focus should be on helping poorer regions to help themselves. This involves advocating for the increased political and economic freedoms of the impoverished and making strident efforts to connect poorer countries to global trade.

The poverty industry is thriving. It is nearly impossible to watch the television without seeing a clip of a starving child drinking from a dirty river accompanied by a plea for donations. This perpetuates the false image of Africa as helpless and dependent, reinvigorating public demands for more aid to be sent overseas. Politicians pride themselves on how much aid their respective governments have sent to developing countries. This is no way to quantify success. More aid doesn’t necessarily equate to more third–world prosperity, as argued by Dambisa Moyo in her bestselling ‘Dead Aid’ in which she sought to put to bed the myth that billions of dollars of aid sent to developing African nations actually reduced poverty and increased growth. The depressing truth revealed by the Acton Institute’s ‘Poverty, Inc’ is that the main beneficiaries of foreign aid are the global poverty industry; aid aids the aiders.

Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.

This proverb has been floating about in public conscious since at least the 19th century yet its message is shamefacedly ignored by many in the poverty industry. ‘Poverty, Inc’ explored the aftermath of the Haiti earthquake, describing how a short term natural disaster led to a long term unnatural disaster as the country continued to receive aid long after the initial catastrophe. 10 000 NGOs stepped in following the earthquake, providing much–needed immediate support to Haitians. Then they refused to let go. Haiti was still receiving free rice three years after the disaster, blocking Haitian farmers from the opportunity to stand up for themselves and massively reducing rice capacity in Haiti. Western farmers benefited hugely from the scheme; Haitian farmers faced ruin.

This is not an isolated example. Aid fails when schemes designed to help the poor are imported from richer nations whose knowledge of the problems faced by impoverished countries is capped beyond their comprehension. In ‘The Economics of International Development’, William Easterly described the tragedy of a World Bank forestry project in Uganda. Attempts to push local farmers to use land for forestry rather than agriculture led to a huge breach of property, political and human rights as more than 20 000 people were evicted from their homes and livelihoods to make way for a tree plantation run by a British forestry company. Homes were burned, crops were torched and livestock were shot. This was not helping the Ugandans to help themselves. This was not helping the Ugandans at all. This was the uninvited imposition of an unsuitable technocratic vision on a group of people with insufficient rights to resist.

Helping the poor does not have to be like this. Much of the Western world has been conned into the belief that the poor are too helpless to help themselves and the only solution is aid. This is not true. No matter how much aid is sent over, the impoverished will still be poor so long as they have no rights. Easterly describes how technical solutions cannot happen on a permanent basis unless there is “an environment of universal rights for poor people and for citizens of a society”. Africa has seen a steady increase in the freedoms of its citizens over recent decades; there are now far fewer African dictatorships than there were twenty years ago. Farmers are increasingly being allowed to sell their produce onto world markets rather than to the state at vastly depressed prices. Progress against poverty is being made via the increasing of freedoms.

These findings should not be taken as a condemnation of the aid industry as a whole; there are many charities and NGOs which have done immeasurable levels of good in the world. Instead they must be taken as a stark warning of the damage that can be done when well–meaning individuals have a heart for the poor but not a mind. It is far too easy to become entrenched in the belief that we alone can help the poor and that to help the poor we must provide aid. Too much aid can do far more harm than good, trapping “developing nations in a vicious cycle of aid dependency, corruption, market distortion and further poverty”. In the long run, the provision of protection, legal freedom and links to wider circles of exchange can do much more good than the replacement of local produce with unsustainably subsidised Western imports.

The best aid is that which helps the poor to help themselves. We must make sure our aid is right, and the right aid is rights themselves.


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