Arguments in Support of Implementing Foreign Aid

Foreign aid had become more frequent and popularised after the second world war, with the introduction of marshal aid and since then, the latter half of the 20th century saw countries being flooded with aid. The turn of the millennia saw a greater push for Africa, a white saviour complex narrative was chanted by the global north; ideas of universal wellbeing – illustrated through the MDGs - a strong sense of moral obligation and duty to help these states especially newly independent state to develop and become a participant of the international community. Now at the end of another decade, we can finally evaluate whether foreign aid truly helps economic development in a recipient country. Aid has had many consequences, depending on the motive of the aid it is difficult to classify whether it was success or failure; some argue that it created a dependency culture, hindering these recipient states from truly developing, others claim that it has boosted economies. I will analyse and evaluate why aid had hindered economic development and failed to rejuvenate it in these recipient countries, and how it helped development focusing on case studies and coming to an overall conclusion.

The liberalist argument is foreign aid does help the economic development in a country, with great emphasis that it's a positive-sum game, both the donor state and the recipient state benefit. Two types are the most popular, emergency aid and sectoral or developmental aid, the former is given when a country experiences unexpected situation like natural disasters, in which it provides temporary relief like medicine and food whereas the latter looks to achieve long term progress. Sectoral aid has been considered to be successful, on the basis that they've achieved their aims. For example, aid played a huge part on efforts towards the eradication of diseases like smallpox and reducing malaria, or how child mortality rate fell to 7.6 million in 2010 from 12 million in 1990 after the UN millennium development programme specified how and what should be done. Foreign aid can jumpstart a developing countries economy as it provides the government with funds to invest in many different sectors from health to infrastructure. The MDGs, while not successful, can be considered to be quite an achievement, especially in what was accomplished under it, some targets like halving extreme poverty were met, enrolment in primary education reached 91 % in 2015 in developing nation and access to clean water increased drastically over the 15 years. While many would consider the MDGs to be failures, they were quite overly ambitious, to begin with, and lacked any real power to ensure countries followed through. This can be argued to be the fault and structure of the international system itself and not necessarily be aid that failed to work and deliver.

Jeffrey Sachs is at the forefront of spearing the support for aid. He is a great advocator of free-market economics and that being the very tool to eradicate poverty and increase economic growth. Highlighting many reasons why some countries fail to achieve economic growth; the poverty cycle, lack of innovation, fiscal trap, trade barriers and a demographic cycle in which he claims that these need to be overcome for countries to start developing. Sachs looks at the positive impact of aid in India, the green revolution, which saw a combination of efforts towards the free market, India was the largest recipient of foreign aid till the 1980s. However, its economic growth rates were virtually stagnant during this period, in which it undergoes some financial reforms, the government relaxed its control over the national economy allowing it to be open to the global markets, companies like Microsoft saw the benefits of cheap and available labour and set up huge centres contributing to the Indian economy by boosting employment as well as exports. Education became a huge focus especially in technology and software, allowing an untapped market on exporting technological expertise and services, allowing the India economy to boom. Financial liberalisation strengthened the impact of foreign aid.

Using this example Sachs goes on to explain that rich countries do not have the obligation to make developing countries rich but argues that they should help 'get their foot on the ladder' and the best way to do this is through the aid that encourages free-market liberalisation. He gave a solution to reducing poverty in Africa, that donors should invest in machinery and technology. All of this focuses on improving the factors of production, specifically labour. By mobilising more of the population, by ensuring they're healthy and educated to increase the productive capacity of the labour force consequently producing more goods and services which leads to an increase in GDP - often favoured as an illustrator of economic growth. By providing that extra push these developing states will eventually reach a self-sustaining economic growth.

However, it is important to note that economic growth and the push for free-market policies does not necessarily mean it'll translate to economic development. A country can have high GDP but the majority of its citizens are still living beneath the poverty line, like India, who despite has a high GDP many of its citizens in rural areas live in extreme poverty. Economic growth cannot solve all social problems if the money is not reinvested back into the country, or that investment in increasing the productive capacity can backfire, like educating the people only for them to leave to a more prosperous country, a brain-dead situation. He also failed to give any example where aid has successfully managed to allow a state to 'take off,' thus theoretically his idea and the steps towards making aid work seems to work on paper but the practicality of the situation may be direr and harder to initiate than expected.

In recent years there has been harsh criticism on the effectiveness and reality of foreign aid. It has done more damage than good, has become an echoed phrase in the field of international relations and development. Rather than helping a country to develop it has become an obstruction in its path to development. The consequences of aid have fashioned a dependency culture that is still thriving and encouraged, in which states are entrenched in a peripheral state of dependency. As the proverb goes, give a man a fish and you feed him for a day, teach a man to fish and you feed him for a lifetime; best explains this situation at its simplest forms. States end up relying on these aids from the global north, it which it provides a temporary solution, never truly setting down foundation and infrastructure that will last when the aid runs out; developing states fail to develop an entrepreneurial spirit. A great supporter of this argument is Dambisa Moyo, who in her book 'dead aid', explained that many recipients of aid were introduced to aid from their birth (since gaining independence) thus citizens expect handouts from the international community rather than setting a foundation that will ensure survival in the long term. As long as this is the case, the sort of free-market capitalism necessary for economic development will never be established. Especially counter-productive is food aid which can make a developing country so dependent on cheap food from abroad that it never develops its agricultural base. It becomes an obstruction on developing local markets in local communities in which local farmers and grocers are outcompeted by cheap food from the international community. Moyo even goes as far to suggest that Africa should be aid free for a minimum of 5 years to allow itself to establish and grow on their own, while this suggestion has gathered critique from both sides of the spectrum (regarding aid) there are some truths to this after all states must develop their industry to compete in the global markets.

Aid would be more effective and benefit the recipients if it reached the people who needed it the most. Overseas aid requires a huge bureaucracy to administer it and, as a result of this and the opportunities for corruption inherent in such a huge industry, many graduates in developing countries find jobs in the aid industry rather than trying to set up their businesses. Transparency and accountability are needed for aid to work. William Easterly, argues that in the last four decades, the West has poured more than $2.3 trillion of aid into Africa but, to this day, poverty and underdevelopment remain a common feature in many recipient African states. Aid correlates with corruption and dishonest governments, the more aid that is given the higher the chances the money is embezzled and siphoned away to those in power, either to retain their power or indulge in a lavish lifestyle. As long as governments can use aid money to pay for essential services, they do not have to establish a properly functioning Rule of Law or viable Taxation system both of which are at the root of development. They also manage to stay in power, because their populations are never driven to a sufficient sense of outrage to overthrow them since they can cloak their corruption and incompetence in foreign aid hand-outs. According to Easterly, it is, therefore, vital that we focus on 'free development, not authoritarian development' aid only works if it is sent to democracies since only then are rulers made accountable for what happens to the aid.

Easterly and Sachs both support aid in this sense but Sachs sees it being successful when aid facilitates free-market liberalization, trusting it will lead to economic growth, re-iterating the beliefs and foundations of international organisation that give aid away while easterly argues that aid is truly ever effective when you have a functioning democracy, accountability and transparency. aid achieves the most practical success when it is invested in stable countries with respect for the rule of law, and are in the progress on becoming democratic This is why aid has gone further in terms of development in Ghana than in Zimbabwe. For example, a national school feeding programmes implemented in Ghana and many African states like Kenya and Uganda, who have also made primary education free, has seen the quality of life for its citizen increase. Senegal is also on track to attain its water and sanitation goals through a national programme that saw investment in this sector with donor support.

Aid needs to be deployed imaginatively and it has to be made country-specific. Food aid might, therefore, be appropriate in the aftermath of a sudden natural disaster, such as the 2010 earthquake in Haiti, but long-term food aid to sub-Saharan Africa has simply made Africans dependent on cheap European and American food exports thus discouraging them from planting their own crops thereby ruining their potential for self-sufficiency. Aid which is used to encourage education can help to provide states with better human capital which is more willing to hold its governments' accountable for their actions and has greater self-belief and is thus empowered by aid rather than being made dependent on it. The World Bank has appreciated this, too, and is increasingly focusing on aid that improves regional infrastructure which will better allow governments to take advantage of the opportunities offered by the free market, while it is increasingly using aid to provide micro-credit to communities trying to establish their own businesses, as well as empowering women within previously male-dominated societies.

In conclusion, a combination of all these solutions and ideas can lead to effective aid that reaps the most benefits for its recipient and there's has been a recent shift in when and how aid should be appropriately used rather than throwing money and claiming you're 'saving the people.' Organisation and the global north are waking up to the illusion that they need to change their strategy and policies on foreign aid, learn what went well and what didn't. Aid does work. It leads to economic development in the recipient states when utilised and planned in a way that provides maximum benefits for the recipient.