Foreign aid

Foreign aid is a voluntary contribution of resources from states to other governments, international organizations, and populations of other countries provided to assist in overcoming distress. There is humanitarian and development aid. The former is mainly used for short-term emergency situations that cause massive human suffering, such as floods, droughts, and earthquakes. Its goal is to provide resources to help the recipient country to become democratic market economy. Aid contributions can be monetary or come in the form of technical assistance or material goods. Although it can save lives, especially of people in the developing world, such aid has also been criticized for distorting political and economic incentives in relatively poor states thereby exacerbating distress, rather than helping to cope with it. As of 2015 the United States provided the most foreign aid in net contributions worldwide. But when ranking aid by the percentage of gross national income, the United Arab Emirates was at the top of the list.

Background

Ideally, foreign aid is governed by two principles: it should be beneficial to the recipient country and its population and it should help others in need. Historically, however, aid has been used to promote the strategic national and commercial interests of the donor nations. Lend Lease, the US military transfer of war materiel to allies during the World War II, was one of the first aid programs that boosted the power of domestic producers. After the World War II, the United States adopted the Marshall Plan, a massive aid program that distributed $103 billion (in 2014 dollars) between 1948 and 1952 to sixteen European countries in order to restore the European economy. The United States feared that if unemployment continued, a new Hitler could again come to power or countries could fall under the influence of the Soviet Union. US global interests in humanitarian assistance also served as an ideological counterweight the Soviet Union, which in 1955 introduced its own massive aid distribution program to support neutral states.

In the 1950s through 1970s, leaders of many underdeveloped countries misused aid, which up to that time had consisted largely of cash transfers and material goods not earmarked for any particular humanitarian use. By the 1980s humanitarian aid gave way to development aid, with Western governments attempting to support the building of functional democratic societies through market economies by tying aid to specific programs and bypassing governments in favor of civil society and social movements.

Topic Today

Since aid frequently serves the national security and commercial interests of donors, debates about foreign aid today are mainly about possible solutions to make it more effective. On one hand, humanitarian assistance and development aid can save lives. On the other hand, both can also distort the political, economic, and moral fabric of recipient countries.

Aid has tremendously improved public health. Vaccines in the 1970s helped South Korea and Taiwan to eliminate smallpox and brought them on the path to development. Twenty-first century efforts to stop malaria, AIDS, and tuberculosis are multinational and sophisticated. The massive free distribution of bed nets treated with long-lasting insecticides have helped Africa's poorest communities to remain healthy and continue working and going to school, which means potentially higher job skills and levels of incomes in the future. In Kenya alone, deaths from malaria decreased from 160 out of every one thousand people in 2000 to no malaria deaths in 2014. Similarly, over ten million AIDS patients are treated each year and the global number of deaths from tuberculosis have been halved since the 1990s.

However, aid has not shown good results in other areas. According to Dambisa Moyo, aid not only reverses economic growth but also increases the risk of civil war. Moyo argues that when free goods come to local communities they undermine domestic producers, who can no longer sell their products, such as fresh milk, because people use free powdered milk. Producers of bread, lentils, meat, and other staples face a similar predicament. As local producers go bankrupt, more communities begin to depend on aid. At the end, a vicious circle is set in place with populations becoming dependent on aid, donors justifying their existence by continuously mobilizing resources, and recipient states benefiting from outsourcing the provision of their population's basic needs and services to donor nations. Problems causing local distress remain unresolved, because too many other stakeholders benefit. In addition, young people faced with dwindling employment prospects are susceptible to radical ideologies, thus increasing instability in aid-dependent states.

Other scholars have also pointed out inefficiencies of aid when given to corrupt governments, debt-burdened states, and countries that do not face distress. In the past, the United States sent aid to the repressive and corrupt governments of Ethiopia under Meles Zenawi Asres for antiterrorism policies and Mauritania under Maaouya Taya for working with Israel. In addition, some of the least developed states still owe billions of dollars to Western governments and international institutions for loans that they took decades ago and cannot pay back. As a result, aid frequently pays for social services in poor states that have no money to fund these projects after the debt repayment. Finally, although the United States announced a plan to spend over thirty-four billion dollars on aid in 2017, the bulk of security assistance money goes to countries in less relative distress than others, including $3.1 billion to Israel, $1.3 billion to Egypt and $367 million to Jordan.

To solve these gaping inefficiencies, scholars recommend distributing aid to governments with established track records of policy implementation and to projects requested by local populations. In practice, however, achieving nation-wide aid coverage without the support of government officials is difficult. Global aid has significant spending power, with the United States alone providing more than one trillion dollars in aid from the mid-twentieth to early twenty-first centuries, but searching for new approaches to the equitable and effective distribution of aid remains warranted and important.

Bibliography

Acemoglu, Daron, and James A. Robinson. "Why Foreign Aid Fails and How to Really Help Africa." The Spectator, 25 Jan. 2014, www.spectator.co.uk/2014/01/why-aid-fails/.

"Foreign Aid: Misplaced Charity." The Economist. 11 June 2016, www.economist.com/news/international/21700323-development-aid-best-spent-poor-well-governed-countries-isnt-where-it.

Larsson, Naomi. "Foreign Aid: Which Countries are the Most Generous?" The Guardian, 9 Sept. 2015, www.theguardian.com/global-development-professionals-network/2015/sep/09/foreign-aid-which-countries-are-the-most-generous.

Moyo, Dambisa. Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa. Farrar, Strauss, Giroux, 2009.

OECD. "Aid at a Glance Charts." Development Finance Statistics, 2015, www.oecd.org/dac/stats/aid-at-a-glance.htm.

Offenheiser, Roy. "We Need a New Approach to Foreign Aid." Time Magazine, 16 Sept. 2016, time.com/4494323/unga-foreign-aid/.

Sachs, Jeffrey. "The Case for Aid." Foreign Policy Journal, 21 Jan. 2014, foreignpolicy.com/2014/01/21/the-case-for-aid/.

Swanson, Ana. "Does Foreign Aid Always Help the Poor?" World Economic Forum, 23 Oct. 2015, www.weforum.org/agenda/2015/10/does-foreign-aid-always-help-the-poor/.

Tarnoff, Curt, and Marian L. Lawson. "Foreign Aid: An Introduction to US Programs and Policy." Congressional Research Service, 17 June 2016, www.fas.org/sgp/crs/row/R40213.pdf.