Reflection on International Aid
It pays to be careful when being charitable
Around the holiday season, I usually donate to charitable organizations as “gifts” for my friends and family. In light of recent (and ongoing) debates about international humanitarian aid, I found myself researching the literature and discussions of the effectiveness of humanitarian aid in developing countries. The arguments I am interested in exploring are those that claim that international humanitarian aid is unable to fix long-term problems in developing countries, that it is at best a “band-aid” approach and at worst a destructive and corrupting force.
Governments of the Western industrialized world have provided over $4.6 trillion in aid to developing countries over the last half-century. This is problematic because studies have shown that there is a correlation between increase in foreign aid and decrease in economic growth. Aid promotes foreign imports, which may threaten local businesses and limit national and international trade. Considering that 70 percent of public funds in Africa come from aid, one can imagine the detrimental effects it has had on the economies of the continent.
Aside from economic consequences, humanitarian aid may often end up in the hands of the corrupt and can have unforeseen ramifications that completely alter a country’s trajectory. Whether it be through the tax dollars paid to the government that finances systematic aid or a personal donation to an ineffective charity, sometimes our donated money falls into the hands of oppressive regimes. Accountability is difficult to enforce, and money frequently ends up in the wrong hands. Monetary aid is most always given in government-to-government transfers, prompting abuse of funds by regimes in power to further the personal interests of politicians. By way of example, Mobutu Sese Seko, president of the Democratic Republic of the Congo from 1965 to 1997, has been accused of robbing billions of dollars from his country. Mobutu isn’t the only one. The African Union estimates that corruption costs the continent $150 billion a year.
Additionally, conditional aid can allow countries to dictate the policies of another. Aid with strings attached often gives donor countries the power to create labor-market restrictions that damage a developing country’s human capital. Aid can also be used to further political ideologies. Aid should not be used as a way of getting countries to “behave,” as some may argue.
Dambisa Moyo, Zambian-born economist and author of “Dead Aid,” makes the point that direct foreign investment, not aid, is the key to economic success. She notes that Malawi, Burundi, and Burkina Faso all had higher per capita incomes than China just 30 years ago. Now China has exponentially higher human capital due to foreign investment, while the economies of the other three countries remain stagnant. They have become “black holes” of foreign aid that fuel rampant corruption.
Even aid for natural disaster relief is problematic, although arguably of the most immediate importance. Moyo notes that nine months after the 2004 tsunami in the Indian Ocean, the charitable organization World Vision “had spent less than a quarter of the $100 million it had raised” due to institutional inefficiencies and a lack of trustworthy organizations to donate to.
Regardless, whether one believes in the effectiveness of aid or not, aid will not be effective if there is no implementation infrastructure and human capital training to match the donated gift. I saw this myself when I was teaching in Eenhana, Namibia two years ago. I saw brand new Dell computers unassembled and collecting dust. The computers had been donated to the school without any research into the community, let alone instructions on how to set them up and use them. Imagine the misuse of funds that could occur on a larger scale.
Even before the 2010 earthquake struck, Haiti relied on nongovernmental organizations for support. But after the earthquake, there were 12,000 NGOs operating in Haiti, and yet only around 10 percent of the funds allocated for Haiti's recovery had been spent by January 2011. The reconstruction of Haiti could have provided an opportunity for job creation within the country, yet only 20 out of the 1,500 aid contracts given out in the year after the earthquake went to Haitian-owned companies.
On a large scale, it is important that developed countries adopt policies that promote trade with and investment in the resources and human capital of developing countries. On an individual scale, if you are inclined to donate to an international charity this holiday season, I recommend doing a bit of research to find an organization that trains and educates the local population and fosters economic growth and on-the-ground sustainability.
Meredith C. Baker ’13, a Crimson editorial writer, is a social studies concentrator in Eliot House. Her column appears on alternate Tuesdays.