Exploring foreign aid
For a program designed to assist and enrich, foreign aid continually appears to hold a presence in debates for all the wrong reasons. If you don’t believe me, try googling those two magic words in the news section. It is all but guaranteed that articles will pop up critiquing usage, demanding cuts or highlighting regrets. If you do not find this to be the case, today must be one of those rare occasions where journalists are feeling particularly charitable. This is not to say the perpetual attacks on foreign assistance are completely unfounded though: the magnitude of donations and time devoted to projects has created impatience and now more than ever, the returns being demanded are seemingly nowhere to be seen.
Opposing arguments often come from those who want to see foreign aid cut or eliminated as opposed to improving it. It’s important to separate the critique from the policy prescriptions so as to come to a more well-rounded and informed view of foreign aid, one that is not so heavily mired in political gamesmanship.
We seem to be continuously bombarded with case studies highlighting the failures of aid. From isolated examples to in depth publications, foreign assistance attracts a ceaseless pool of critics. One such example was recently highlighted by British Conservative Esther McVey, who, in June 2019, stated that “We know airports have been built [using foreign aid] and actually the runways are in the wrong direction because of the winds… we can’t take off and land because of ...the cross winds there.” Whilst she was unable to elaborate on her claim, it is believed she was referring to St Helena Airport, a project built using £285 million from the Department for International Development (DFID). When operations first began in 2016, commercial charters were cancelled due to severe windshear, and the “world’s most useless airport” touched down onto our newsreels.
On face value, this is striking: DFID effectively pouring money down the drain due to a small oversight. By October 2017, regular AirLink services began running and 4 months later, the RMS St Helena, previously their sole “link to the outside world” was decommissioned. Planned to be the cornerstone of their tourism industry, this airport has allowed a remote island to connect to the world despite initial growing pains.
The St Helena Airport seemed to be the embodiment of aid’s failures, used as a bludgeon to score political points during the aid debate. The reality demonstrates how misguided such criticisms can be. This seemingly wasteful project ended up delivering positive impacts to the wellbeing of locals, offering an additional source of economic stimulation through tourism and providing an access point to the rest of the globe. Admittedly, this is just an isolated case study, however, opponents of aid seem to build cases off such examples. Whilst there are inevitably situations where allocations have been squandered, there is little doubt in my mind that aid has improved the livelihood of a multitude of citizens. Accordingly, this piece will explore and unpack an array of the most common misconceptions and criticisms of foreign aid and consider a more effective manner in which to conduct it.
purely financial
In order to offer some sort of evaluation, it is imperative to understand the nuances of foreign aid. This umbrella term encompasses anything provided from one country with the intention of benefitting another, whether that be in the form of monetary donations, food rations, service support, or physical resources. An example of this is humanitarian aid, a subset of foreign aid, which offers short term relief to disadvantaged groups including the homeless, refugees, and disaster victims. This is often in the form of material and logistic assistance that is most appropriate to the situation, able to sustain wellbeing, and alleviate suffering before larger government and other institutions step in. Organisations such as Unicef, Oxfam, and World Vision rely on foreign aid to drive a large amount of their services, many of which are life-changing for countless individuals globally.
lines the pockets of “corrupt” and “wasteful” governments
Concerns about allocating aid to finance corrupt dictatorships and governments are rampant. The damages caused by these were outlined in Dambisa Moyo’s scathing 2009 publication Dead Aid, which insinuated that not only had aid had little impact on encouraging development, but had in fact being counterproductive. Moyo asserted that aid confines economic growth, creates dependence on grants among recipients, and above all not only incentivises corruption, but causes it. Despite being a decade old, it is still used by critics as the Holy Grail of aid’s shortcomings, certain studies continuing to claim that as much as 70% of foreign aid goes straight into the pockets of corrupt officials.
In reality however, it has become clear that allocations are being repackaged in an attempt to be more efficient and encourage greater progress. There is now more focus than ever on funding specific projects within developing countries, as opposed to depositing funds in government bank account and hoping for the best. Even the US, once one of the worst perpetrators, has endeavoured to shift public perception through reforming their aid structures. 2018 statistics show the US split their official development assistance as such:
Governments: 21%
Non-profit organisations: 20%
Multilateral organisations: 34%
Elsewhere: 25%*
*elsewhere includes funding direct US government projects (i.e. military establishments, sending food and water aid through emergency aid etc.)
Additionally, corruption appears to have been used as a political tool to restrict funding towards certain projects and a simplistic excuse as to why particular allocations were not effective. It is easy to get caught up in worrying about the potential for aid funds to be swallowed by greedy dictators and in turn choose not to send donations at all:
As a result, in analysing aid outcomes, there can be a detrimental emphasis on finances that may not be wholly accounted for over the actual progress made. Whilst it is unquestionably of concern when large portions of money are falling into undeserving hands, a greater level of weighting must be given to the physical outcomes of projects. If what was set out to be achieved has been completed, however there are some whisperings of mis-allocated funds, is it justifiable that a project be halted completely? One can reasonably infer that if targeted outcomes were achieved, that a reasonable proportion of aid did actually go towards fuelling that. Tying into this, concessions can be made considering there may be difficulties in managing the results that aid is directly responsible for, which renders it difficult to establish a causal link. Should genuine progress be halted or reversed just because 5% of it was misallocated?
no way to meaningfully measure its effects
A pre-eminent issue remains: How can the benefits of aid be measured? A common critique of foreign aid is that it pursues abstract and intangible goals, the achievement of which cannot be meaningfully evaluated. This has some grounding as certain targets of aid such as ‘improving’ political institutions, judicial reform, human rights, democratic reform, corruption, and happiness are particularly difficult to measure in a tangible way. This can lead to unstructured or unguided aid that one cannot be sure is having the desired effect.
Many metrics have been explored as a way to quantify economic development such as GDP, GNI, HDI, and more, although these do not capture the full picture.
Simply using metrics such as GDP or GNI per capita in isolation is a simplistic way of measuring development that does not consider other important indicators such as the distribution of wealth, the cost of economic growth, environmental impact, nor other elements of wellbeing. Creating rigid metrics, whilst quantifiable, excludes integral elements of human welfare that must be considered.
In analysing development, it is imperative to formulate a holistic understanding that captures the totality of needs and desires of recipient countries, while retaining the use of certain metrics as guides in developing clear guidelines and targeted outcomes.
The UN have crafted the Sustainable Development Goals (SDG’s) in an attempt to strike this essential balance.These are a series of actionable and material goals that target a broad spectrum of development outcomes whilst maintaining appropriate sustainability considerations, ensuring that anthropogenic climate change is not ignored nor exacerbated by the pursuit of other development aims. Aligning foreign aid to the SDG’s will help resolve the previously outlined problems and set clear, measurable, and achievable reference points.
has not achieved any progress
As alluded to, the positive influences of aid must be viewed holistically in order to truly understand the effects it has had. The Millennium Development Goals were a set of aims that 189 countries committed to support between 2000 - 2015; these offered a multifaceted approach to development before being succeeded by the aforementioned SDG’s. Certain highlights are as follows:
A 53% reduction in child mortality (probability of a child dying before the age of 5)
The number of people living in extreme poverty fell from 1.9 billion to 836 million
Enrollment in global education rose from 83% to 91%
HIV infections are down 40%
An extra 2.6 billion people have gained access to healthy drinking water
6.2 million malaria deaths were averted through provision of mosquito nets, vaccines, and pesticides.
That said, it is evident that a majority of these actually failed to meet targets, specifically 5 out of the 6 with measurable outcomes. Accordingly, many view these goals as the epitome of the shortcomings of foreign aid. Even a worldwide concerted effort marshalled by the United Nations fell short of expectations. Whilst it can easily be insinuated that not reaching these goals is disheartening, I would argue that it should be used as a point of inspiration, and be leveraged in the pursuance of the SDG’s. Significant progress was made as a result of 189 countries taking action and this momentum can and should be maintained. In this time, whilst also relating to MDG #8, foreign aid expenditure increased 66% in real terms, highlighting the relationship between tangible development growth and aid allocations. In addition, meeting all the goals could induce a sense of completion or satisfaction among countries, making them more inclined to rest on their laurels and take less initiative on future progress.
We must not forget that these efforts are forging pathways for enriching lives all across the globe: Access to basic necessities such as healthcare, food, water and education that we may take for granted. Had each of the MDG’s succeeded, there would remain 12% of people in developing regions still suffering extreme undernourishment, yet rectifying this may be treated with less urgency due to the ‘achievement’ of goals. Accordingly, reaching such targets in the future would simply result in minor victories that should by all means be celebrated, yet not diminish from the overarching rationale behind such goals: Achieving universal development.
an immense waste of government resources that has no tangible benefit
From the perspective of donor countries, resentment may form among citizens regarding foreign aid due to a perceived distortion in priorities of the government. The role of the government is seen as to protect and empower its people, so difficulties can arise in the justification of outward spending when there remain those struggling domestically. In Australia, stark issues regarding homelessness and poverty are still rampant, 13.2% of citizens living below the internationally accepted poverty line. Resultantly, one may query whether the government is actively fulfilling its role if it continues to commit large commitments to foreign aid. However, such perceptions are inherently nationalistic and do not recognise trends in globalisation. In today’s interconnected economy, internationalism is at the forefront of political decision-making and a salient factor in advancing a country’s own interests. Being ignorant to such values is restrictive and damaging to future progress.
Furthermore, studies have suggested that negative public sentiment regarding foreign aid is in many cases unfounded. However, a large portion of the population overestimates our commitment to aid. A 2017 Lowy Institute Poll revealed only 22% of Australian supported an increase in our foreign aid investment ($3.8 Billion), the majority supporting a significant decrease. In the following year, the Lowy Institute once again addressed this issue, although they decided to approach their reporting in a different manner due to the potentially misleading nature of absolute dollar figures.
The outcomes were striking. It was revealed that many Australians have a heavily distorted conception of aid: On average it is believed that approximately 14% of our budget goes towards foreign aid and that this figure should be immediately stripped down to 10%. Such viewpoints are easy to fathom considering the incessant airtime that the foreign aid debate receives, yet it remains particularly alarming when compared to the reality that we invest only 0.8% of our annual budget. Whilst it is imperative to take such publications with a grain of salt given they may be pushing a particular agenda, similar themes of public unfamiliarity are noticeable in Britain and the United States. It is difficult to determine the exact cause of these overestimates, however the influence of the media and ceaseless political furore regarding this may be significant factors.
The perception of aid as being a waste of government resources acts as an implicit suggestion that allocations attract no real return. However, aid can be utilised as a tool for advancing domestic self-interest.
no tangible benefit to the donors
Not only is the size of commitments being overblown, but there is reason to consider foreign aid even from a self-interested perspective. Foreign aid is a fantastic way to build international relationships, develop a positive reputation, and to build multilateral cooperation. These relationships occur both with the recipient of the aid and other donor countries as collaboration is made in areas such as disaster relief or crisis mitigation that bleed into other areas of this relationship.
One example (of many) of potentially self-interested aid is the Marshall plan. After World War 2, the economies of Western Europe were in tatters having just been through one of the most traumatic periods in world history. The United States, having been relatively unimpacted, gave nearly $100 billion (2018 USD) in aid to Western Europe. This was a mutually beneficial arrangement as the two parties became key trade partners and geopolitical allies, the foundation of this relationship forming as a result of post-ww2 recovery assistance.
While it would be preferable for genuine compassion and care for human wellbeing to govern the decision to commit to foreign aid, it should be noted that it need not be an altruistic sacrifice for donor countries and that it can be mutually beneficial. On the other hand, it is also important that aid is consensual, participatory, and that it is not used to create leverage and an exploitative relationship.
Conclusion
The plight of developing countries should not be exclusively contingent on aid payments - Aid should simply be part of a multi-faceted approach to improve wellbeing. It is instead the role of citizens, governments and local institutions to act in a cohesive and holistic manner that incorporates aid but does not rely exclusively upon it.
Prejudices against aid are often founded on misconceptions or selective case study analysis that distorts the picture. Suggestions to dismantle foreign aid are irresponsible and would ravage all of the incredible progress that has been made thus far. Is foreign aid perfect? No. Does it need to be allocated in a more effective manner? Absolutely. Offering tailored and participatory services that prioritise education, trade, and the preservation of life will allow for a focused effort with measurable success.
Foreign aid is a valuable tool that has the potential to deliver tangible outcomes that improve the lives of others. With increased awareness and effectiveness, it can become even more transformational and should be taken seriously. Accordingly, continual critique and evaluation of aid allocations should in fact be encouraged. Being satisfied whilst there remain large bodies of people without access to basic human necessities should not be an option, and a potential solution lies in a more efficient and tailored version of foreign aid.
Author: Angus Kennedy | GMCC Director