DEVP7002 - Critical inquiry, Development and Emergencies
Assignment 1: 1500 words
"Those who can, should help those who are in extreme need. This is the principle that underpins and drives support for foreign aid" (quoted in Riddell R, 2007, p. 1; Does foreign aid really work?). Do you agree?
Introduction Foreign aid has growing controversial opinions. When noting perspectives of those who reside in areas heavily dependent on foreign aid, the benefits are denounced. Shrestha Nanda criticises the introduction of foreign aid in his hometown of Nepal, as a “regressive trend” which strengthened existing class divides and undermined Nepalese self-sufficiency. Aid created a promise of a glamorous and comfortable life but did nothing to equip people with the tools to achieve this on their own, ultimately creating dependency and stunting economic growth [Nanda S, 1995]. Thus, this essay argues that those who can, should not help those who are in extreme need, because this act of helping, in itself, causes greater harm than good.
The aim of this essay is to critique the impact of foreign aid on the long-term economic growth of countries, focussing primarily on the perspectives of those that have historically been recipients of aid. It will expose the ‘hidden’ motivations of aid, which continues to be supplied, despite major criticisms suggesting that not only does it fail to work, but more concerningly, that it can cause detrimental harm to countries’ long-term growth.
Defining foreign aid Foreign aid can be categorised into two main forms. The first is humanitarian aid which targets the immediate effects of an emergency and is intended to be
Student No: 19172452
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DEVP7002 - Critical inquiry, Development and Emergencies
Assignment 1: 1500 words
short-term. Most critics, including those from recipient countries, admit that humanitarian aid, to some extent, is successful in its purpose. On the other hand, development aid, which this essay focuses on, is used to “support longer-term development processes” [Riddell R, 2014:3] and has received much more criticism. According to the Development Assistance Committee, development aid predominantly takes the form of ‘official development assistance’ (ODA), defined as the flows from ‘official’ agencies, including bilateral and multilateral governments, to developing countries [Riddell R, 2007].
However, as Riddell observes, the problem with all of these definitions is that they are skewed towards “the intentions of those giving the aid, the donors, rather than those using it, the recipients” [C.Riddell, 2007:18]. This indicates that from the onset, the motivations of aid giving are heavily influenced by, typically western, ideologies of what donors believe is needed in order to be considered ‘developed’.
The ‘hidden’ motivations of aid Ben Ramalingam, in his book ‘Aid on the edge of chaos’ states that “it has become important to separate out development as a legitimate and worthy aspiration, from ‘development aid’ as the ideas and practices promoted, delivered, and supported by the international community to low and middle income countries” [Ramalingam, 2013:xiii]. His argument reflects on the evident gap between what donors promise of aid and what is actually delivered. In fact, Moyo [2009], Nanda [1995] and Ang [2016] all argue that aid has been at the detriment of their respective countries’ growth. But if aid is failing to achieve its fundamental goals, why do foreign countries continue to provide it?
Student No: 19172452
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DEVP7002 - Critical inquiry, Development and Emergencies
Assignment 1: 1500 words
One possible answer is the Neo-Marxist idea that the advancement of developed countries has only been made possible as a result of ensuring that the Global South remains ‘under-developed’ [Farah I et al. 2011:5]. Entrenched within colonialism, the act of aid-giving is a way to maintain dominance over global markets and keep the power firmly rooted in the West [Nanda S, 1995]. This is clearly evident in the application of aid, from its Western-style definition to donors from the West determining how much aid is given and how it should be used [Riddell R, 2014]. This undermines the presence of local governments, leaving them with less say in how their own countries are run, often resulting in passive or even rogue governance, which can derail their economic growth.
Another underlying motivation is economic pressure. Donors have to operate within ‘fiscal year’ limits, which means they are subject to the principle of borrowing, whereby ‘underspending’ in one year would mean a reduction in funding in the following year. Additionally, donors cannot risk losing out on the owed debts that have accrued over the many years in which they potentially overestimated the revenue generated by recipient countries’ growth. This pressure is further intensified by the fact that the employment of all those within the aid-giving industry depends on its continuity [Moyo, 2009]. Thus they continue to justify its existence.
However, these two reasons contradict each other as the conditionalities imposed by the West have little bearing when the commodity they’re trading with, the aid, is free flowing. Thus, it seems aid predominantly flows between the donor elites and the recipient elites, and ultimately the people that are left behind are those for whom the aid is actually intended.
Student No: 19172452
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DEVP7002 - Critical inquiry, Development and Emergencies
Assignment 1: 1500 words
Why aid does more harm than good Though aid continues to be supplied generously, in their respective assessments of the impact of aid on their home countries, both Nanda [1995] and Moyo [2009], who grew up in recipient countries and later worked in donor countries, conclude that “aid has helped make the poor poorer, and growth slower" [Moyo, 2009:xix]. Their critiques paint a concerning picture of the role of aid in perpetuating poverty, aiding corruption and creating dependency on other nations.
One overarching effect of aid on long-term growth is that it leads to weaker institutions [Rajan R, et al. 2006]. This is particularly evident in Moyo’s analysis of the “vicious cycle of aid” [Moyo, 2009:49] in her home country of Africa. Here, the steady flow of money from donors has fostered a culture of ‘rent-seeking’, allowing governing bodies to acquire money without the need for trade or economic growth. Aid has effectively become a substitute for tax revenues, which reduces the government’s financial reliance on its citizens and promotes a culture of ‘laziness’ and a lack of accountability. In turn, this weak governance reduces transparency and increases distrust from domestic and foreign investors, shrinking the job market and ultimately increasing the rate of poverty. With more poverty comes more aid and thus it becomes a vicious cycle of degradation [Moyo, 2009]. Another related downfall of aid is its ability to create or perpetuate corruption. Moyo argues that “foreign aid props up corrupt governments - providing them with freely usable cash” [Moyo, 2009:49]. The motivations for aid-giving, highlighted previously, explain, but don’t justify, why aid continues to be given so freely. However, this means it can be easily stolen or used for personal gain by recipient elites without much resistance. Thus,
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DEVP7002 - Critical inquiry, Development and Emergencies
Assignment 1: 1500 words
corruption leads to the same effect as dependency, whereby the misuse of funds deters foreign investment and therefore limits economic growth.
Peter Bauer, one of the first critics of aid as a development tool, saw aid as a “form of taxing the poor in the west to enrich the new elites in former colonies”. [Moyo, 2009:67]. This further reiterates how aid increases the disparity in recipient countries by failing to reach those that actually need it. A notable example of this effect can be seen within the history of Congo, where Mobutu Sese Seko, a former President, became one of the worlds’ wealthiest individuals, despite years of foreign aid failing to pull the Congolese people out of poverty [Trefon T, 2011]. Quite alarmingly, this indicates the effects that aid can have on intensifying the disparities within nations.
Not only can aid prohibit growth and increase poverty but it has also frequently been seen to undermine, or even decimate, existing local programmes. One such example is where the Asian Development Bank introduced an aid-supported agricultural reform programme in the 1970s to “improve and modernise” [Ramalingam, B, 2014: xiii], the flourishing Balinese rice farming system. Instead of strengthening the process, it resulted in a major crash in productivity and yields, ultimately destroying a thousand year old livelihood [Ramalingam, B, 2014]. Unfortunately, this is not an isolated incident. As David Karanja, a former Kenyan member of parliament lamented, “what is sad is that the [foreign] experts who draw [the] development plans are people completely out of touch with the local...reality.” [Ayodele, T, et al. 2005:3]. Although more aid programs have begun to engage in community participatory methods since the initial time of Ayodele's writing, this is predominantly during the planning stage and the foreign donor still has the final say on how the money is
Student No: 19172452
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DEVP7002 - Critical inquiry, Development and Emergencies
Assignment 1: 1500 words
actually spent [Moyo, 2005:27]. This clear lack of control that recipients possess in determining their own growth is worrying, to say the least, and poses the question of whether aid in its current form would still exist if more of the recipient population was involved in the decision making at every stage of the development process.
Conclusion The findings of this essay indicate that, from the eyes of recipients, aid-giving is not only a waste of time and money but can be destructive and impede a countries’ long-term economic growth. This can have adverse effects on the poorest communities and further exacerbate their “extreme needs” which is a strong indication that foreign aid is failing to achieve its purpose. This essay therefore rejects the notion that “those who can, should help those who are in extreme need” [Riddell R, 2007].
It should be acknowledged, however, that the literature from the views of recipient countries is still limited in comparison with the vast amount of perspectives from donor countries. This in itself, reflects a pitfall of aid as it points to the imbalance of voices in decision making surrounding countries’ development and economic growth. Any endeavors to improve upon or find alternative solutions to foreign aid in the future, need to first seek out analysis of its effects from within recipient countries in order to truly understand the implications of aid on impoverished communities.
Student No: 19172452
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DEVP7002 - Critical inquiry, Development and Emergencies
Assignment 1: 1500 words
Bibliography Ayodele T, Cudjoe F, Nolutshungu T, and Sunawabe C (2005) African Perspective on Aid: Foreign Assistance Will Not Pull Africa Out of Poverty, Cato Institute Economic Development Bulletin No. 2,p.1-3 https://object.cato.org/sites/cato.org/files/pubs/pdf/edb2.pdf. Accessed: 26/10/21 Ang, Y. (2016) How China Escaped the Poverty Trap. Cornell University. Press. Farah I, Kiamba S and Mazongo K (2011) Strategies to confront the Challenges of the 21st Century: Does Africa have what is required? International Symposium on Cultural Diplomacy in Africa, p.5-6 https://www.culturaldiplomacy.org/academy/content/pdf/participant-papers/africa/Ibra himfarah-Kiamba-And-Mazongo-Major-Challenges-Facing-Africa-In-The-21st-Centur y-A-Few-Provocative-Remarks.pdf. Accessed: 27/10/21 Moyo, D. (2009) Dead aid. London: Penguin Books. Nanda, S. (1995) Becoming a development category. Power of Development, Florence: Taylor & Francis Group Rajan, R. and Subramanian, A. (2006) What undermines aid's impact on growth?. Washington: International monetary fund. Ramalingam, B. (2013) Aid on the edge of chaos. Oxford: Oxford University Press. Riddell, R. (2007) Does Foreign Aid Really Work?. Oxford: Oxford University Press. Riddell, R. (2014) Does Foreign Aid Really Work? An updated assessment, Canberra: Crawford School of Public Policy, The Australian National University Trefon, T. (2011) Congo Masquerade : The Political Culture of Aid Inefficiency and Reform Failure. 1st ed. London: Bloomsbury Academic & Professional
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