Foreign aid has become the new buzzword for 21st century governments and charities alike, resulting in massive outlays from new actors like The Bill and Melinda Gates Foundation. The Foundation, with a $37 billion endowment, is the largest charitable organization worldwide and has already contributed over $8 billion in aid to global health causes.
On the political side, one of President Bush's few popular foreign policy measures has been the 2002 passage of the Millennium Challenge Account, a bilateral development fund granted to countries meeting eligibility criteria. Not to be outdone, in November, Sen. Barack Obama (D-Ill.) bolstered his promises for multilateral diplomacy by pledging to nearly double Official Development Assistance (ODA) to $50 billion by 2012.
But while this disbursement might touch upon the heartstrings of American constituents, it vociferously divides development economists. Leading the vanguard of pro-aid economists is Jeffrey Sachs, Special Advisor to United Nations Secretaries-General Ban Ki-Moon and Kofi Anan. According to his theories, destitution stems from a systemic lack of money rather than dammed-up massive aid.
Key to this approach is an upsurge in global ODA levels, peaking at $195 billion by 2015. For Sachs, development aid's saturation of poor country's budget deficits enables each individual country to afford the provision of public goods - transportation, education and health care - which ultimately leads to higher individual production. Thereafter, the citizens are positioned to work and develop themselves out of their poverty.
However, this notion is riddled with fallacies, principally in the na've notion of aid's seamless integration into the domestic economy. Bottom-up developers like New York University economist William Easterly note the repercussions of implanting large amounts of money into the national reserves. This cash flow inflates the currency through unearned production in a manner strikingly similar to that seen in oil-rich countries, often causing now-overpriced exports to collapse the country's international trade.
Given poverty's often concomitant run with poor governance structures, high ODA also dangles a tempting fruit for countries, increasing the capture value of the state and exacerbating violent conflict and ethnic strife. This aid is often processed through large government bureaucracies, frequently with little oversight or verification of the money's ultimate destination. After the money trickles past consulting, distribution and transportation fees accruing to the donor country - as one African finance minister laments - only pennies remain for our country.
The aid often serves to stifle products and expertise as well as re-align national priorities. For instance, public health in many African nations now mirrors the bias of the Western model of treatment. Driven behind the banner of reducing HIV/AIDS, Western nations have poured billions into Africa, essentially setting the national public health agenda in sub-Saharan Africa. Thus, the discrepancy between the Western world's priorities, legislated according to developed-world medical standards, and those of the developing world glares.
Aid has shifted the perceived problem from fixing public health entirely to focusing on stemming specific diseases. With immediate death from starvation, diarrhea and malaria knocking at the door, should the global community's health aid really be focused on expensive treatments for high-profile infections such as HIV/AIDS, with the goal of prolonging the victim's life for a few years? Furthermore, lavishly funded foreign organizations also move each nation's top clinicians away from primary and child health, luring them with higher pay.
I'm not unanimously against government aid, provided it's granted in an appropriate manner. For instance, I support disbursement with fewer stipulations and conditionality, which might help countervail the time-honored condescending notion that the Western world always knows best.
What certainly isn't helping, though, is the current method of delivery that couples bureaucratic snares with developed-world bias. It is so closely interwoven into trade agreements and disbursement stipulations that the entire process suggests quasi-aid imperialism.
This is not to say that my espousing the removal of development aid implies empathy for the plight of the underdeveloped countries. On the contrary, I think the presence of so many poor countries represents a high opportunity cost in potential trade partners.
If helping them truly is our goal, however, we'd be infinitesimally better advised to do so through the economist's cliché "Trade, not Aid." As a sign of diplomacy, we could shed some of our many biased trade policies that unfairly mire countries in lopsided trade agreements - countries which are furthermore held hostage by potentially losing access to the world's largest market.
These are some of the hard concerns I'd like to submit to J. Brian Atwood, a former administrator of the U.S. Agency for International Development. He will be participating on February 22nd in the EPIIC symposium panel "Alleviating Poverty: Is Aid the Answer?" Though we probably come from diametrically opposed viewpoints on aid, there is one mutual point we both concede: the lives of the estimated 1.3 billion people living at $1 per day is hanging in the balance.
Danny Negless is a freshman who has not yet declared a major.
