Wednesday, April 13, 2011

Foreign Aid

Here are some readings and viewings on the pros and cons of foreign aid:

Various views at the Guardian.

Dambisa Moyo voices her strong objection to aid for Africa at the NYT.

Here's Moyo at the Colbert Report.

Moyo and Sachs argue at the Huffington Post here and here.

Bill Gates at Time.


  1. Funny that Bill Gates mentions the $10 bill on the ground joke. I'm pretty sure that the ECN221 book by Bernanke and Frank has a similar situation where Bill Gates is the guy walking down the street.

  2. I think Moyo has a good point that aid to Africa can be ineffective and inefficient because it is given in "open-ended committments" and doesn't provide incentives for countries to establish financial sustainability beyond aid. The Marshall Plan was effective, because countries knew that it was a short term solution.

    An interesting aid decision that was made recently was that the UK decided to change the focus of its aid. They are looking to ween countries off aid where captialism is working. Something Collier mentioned in the book that would be effective for reaching the MDGs in the bottom billion.

  3. "Well-meaning calls to cancel debt mean little when the cancellation is met with the fresh infusion of aid, and the vicious cycle starts up once again."

    I want to expand on this statement...

    Could the donor nations use a "debt-for-nature" type system but instead a "debt-for-natural resources" policy? Cancel the nation's debt in exchange for access to a certain predetermined amount of their natural resource...then reinvest the generated revenues from the natural resources in the donor country into the aid country in order to spark investment and economic growth. Investing in the country instead of blindly sending aid is a more efficient and sustainable growth opportunity. It sounds almost too easy and I'm not even sure it would work...but let's be honest, nothing else really is either.

  4. In addition to debt relief, aid to developing nations stricken by natural disaster is also important . When Cyclone Nargis hit Burma in 2008, a lot of the aid in the form of water, food, etc. was hoarded by individuals and resold on black markets. Countries where poverty is high are more likely to experience this corrupt use of foreign aid. However, without foreign aid the country will be crippled forever. Countries with dictatorships or bad relations are less likely to be helped in the first place. After knowing what their citizens will do with the aid what are foreign nations supposed to do?

  5. I thought the article by Katy Taylor in The Guardian was very interesting, I read this article a few weeks ago and it changed my opinion on AID.

    It was intriguing to read that the governments of countries who receive huge amounts of AID often turn their backs on the people of the country. The fact that these governments no longer rely on taxes as they have a huge amount of income from elsewhere is very interesting. It makes me worried for the people of these countries as their situation is not likely to improve under these circumstances.

    After reading the article I realized that simply donating money to help poorer countries isn’t enough. It vital that the money donated is monitored and used efficiently to help improve these struggling economies. It is obvious that a reduction in corruption will go a long way to helping these AID dollars being spent more effectively.