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In
international relations International relations (IR), sometimes referred to as international studies and international affairs, is the scientific study of interactions between sovereign states. In a broader sense, it concerns all activities between states—such ...
, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of
resource Resource refers to all the materials available in our environment which are technologically accessible, economically feasible and culturally sustainable and help us to satisfy our needs and wants. Resources can broadly be classified upon thei ...
s from one
country A country is a distinct part of the world, such as a state, nation, or other political entity. It may be a sovereign state or make up one part of a larger state. For example, the country of Japan is an independent, sovereign state, whi ...
to another. Aid may serve one or more functions: it may be given as a signal of
diplomatic Diplomatics (in American English, and in most anglophone countries), or diplomatic (in British English), is a scholarly discipline centred on the critical analysis of documents: especially, historical documents. It focuses on the conventions, p ...
approval, or to strengthen a
military A military, also known collectively as armed forces, is a heavily armed, highly organized force primarily intended for warfare. It is typically authorized and maintained by a sovereign state, with its members identifiable by their distinct ...
ally An ally is a member of an alliance. Ally may also refer to: Place names * Ally, Cantal, a commune in the Cantal department in south-central France * Ally, County Tyrone, a townland in County Tyrone, Northern Ireland * Ally, Haute-Loire, a commun ...
, to reward a
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government i ...
for behavior desired by the
donor A donor in general is a person, organization or government which donates something voluntarily. The term is usually used to represent a form of pure altruism, but is sometimes used when the payment for a service is recognized by all parties as rep ...
, to extend the donor's cultural influence, to provide
infrastructure Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
needed by the donor for resource extraction from the recipient country, or to gain other kinds of
commercial Commercial may refer to: * a dose of advertising conveyed through media (such as - for example - radio or television) ** Radio advertisement ** Television advertisement * (adjective for:) commerce, a system of voluntary exchange of products and s ...
access. Countries may provide aid for further diplomatic reasons.
Humanitarian Humanitarianism is an active belief in the value of human life, whereby humans practice benevolent treatment and provide assistance to other humans to reduce suffering and improve the conditions of humanity for moral, altruistic, and emotional ...
and
altruistic Altruism is the principle and moral practice of concern for the welfare and/or happiness of other human beings or animals, resulting in a quality of life both material and spiritual. It is a traditional virtue in many cultures and a core asp ...
purposes are often reasons for foreign assistance. Aid may be given by individuals, private organizations, or governments. Standards delimiting exactly the types of transfers considered "aid" vary from country to country. For example, the United States government discontinued the reporting of military aid as part of its foreign aid figures in 1958. The most widely used measure of aid is "
Official Development Assistance Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It ...
" (ODA).


History


Definitions and purpose

The
Development Assistance Committee The Organisation for Economic Co-operation and Development's (OECD) Development Assistance Committee (DAC) is a forum to discuss issues surrounding aid, development and poverty reduction in developing countries. It describes itself as being the ...
of the
Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
defines its aid measure, Official Development Assistance (ODA), as follows: "ODA consists of flows to developing countries and multilateral institutions provided by official agencies, including state and local governments, or by their executive agencies, each transaction of which meets the following test: a) it is administered with the promotion of the economic development and welfare of developing countries as its main objective, and b) it is concessional in character and contains a grant element of at least 25% (calculated at a rate of discount of 10%)." Foreign aid has increased since the 1950s and 1960s (Isse 129). The notion that foreign aid increases economic performance and generates economic growth is based on Chenery and Strout's Dual Gap Model (Isse 129). Chenerya and Strout (1966) claimed that foreign aid promotes development by adding to domestic savings as well as to foreign exchange availability, this helping to close either the savings-investment gap or the export-import gap. (Isse 129). Carol Lancaster defines ''foreign aid'' as "a voluntary transfer of public resources, from a government to another independent government, to an NGO, or to an international organization (such as the World Bank or the
UN Development Program The United Nations Development Programme (UNDP)french: Programme des Nations unies pour le développement, PNUD is a United Nations agency tasked with helping countries eliminate poverty and achieve sustainable economic growth and human deve ...
) with at least a 25 percent grant element, one goal of which is to better the human condition in the country receiving the aid." Lancaster also states that for much of the period of her study (World War II to the present) "foreign aid was used for four main purposes: diplomatic ncluding military/security and political interests abroad developmental, humanitarian relief and commercial."


Extent of aid

Most
official development assistance Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It ...
(ODA) comes from the 30 members of the
Development Assistance Committee The Organisation for Economic Co-operation and Development's (OECD) Development Assistance Committee (DAC) is a forum to discuss issues surrounding aid, development and poverty reduction in developing countries. It describes itself as being the ...
(DAC), or about $150 billion in 2018. For the same year, the OECD estimated that six to seven billion dollars of ODA-like aid was given by ten other states, including China and India.


Top 10 aid recipient countries (2009-2018)


Top 10 aid donor countries (2020)

Official development assistance (in absolute terms) contributed by the top 10 DAC countries is as follows.
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
countries together gave $75,838,040,000 and EU Institutions gave a further $19.4 billion. The European Union accumulated a higher portion of GDP as a form of foreign aid than any other economic union. :* – $75.8 billion # – $34.6 billion # – $23.8 billion # – $19.4 billion # – $15.5 billion # – $12.2 billion # – $5.4 billion # – $5.3 billion # – $4.9 billion # – $4.7 billion # – $4.3 billion Official development assistance ''as a percentage of
gross national income The gross national income (GNI), previously known as gross national product (GNP), is the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP), plus factor incomes earned by foreign ...
'' contributed by the top 10 DAC countries is as follows. Five countries met the longstanding UN target for an ODA/GNI ratio of 0.7% in 2013: # – 1.07% # – 1.02% # – 1.00% # – 0.85% # – 0.72% # – 0.67% # – 0.55% # – 0.47% # – 0.45% # – 0.45%
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
countries that are members of the Development Assistance Committee gave 0.42% of GNI (excluding the $15.93 billion given by EU Institutions).


Types

The type of aid given may be classified according to various factors, including its intended purpose, the terms or conditions (if any) under which it is given, its source, and its level of urgency.


Intended purpose

Official aid may be classified by types according to its intended purpose. Military aid is material or logistical assistance given to strengthen the military capabilities of an
ally An ally is a member of an alliance. Ally may also refer to: Place names * Ally, Cantal, a commune in the Cantal department in south-central France * Ally, County Tyrone, a townland in County Tyrone, Northern Ireland * Ally, Haute-Loire, a commun ...
country.
Humanitarian aid Humanitarian aid is material and logistic assistance to people who need help. It is usually short-term help until the long-term help by the government and other institutions replaces it. Among the people in need are the homeless, refugees, and v ...
is material or logistical assistance provided for humanitarian purposes, typically in response to humanitarian crises such as a
natural disaster A natural disaster is "the negative impact following an actual occurrence of natural hazard in the event that it significantly harms a community". A natural disaster can cause loss of life or damage property, and typically leaves some econ ...
or a
man-made disaster Anthropogenic hazards are hazards caused by human action or inaction. They are contrasted with natural hazards. Anthropogenic hazards may adversely affect humans, other organisms, biomes, and ecosystems. They can even cause an omnicide. The freq ...
.


Terms or conditions of receipt

Aid can also be classified according to the terms agreed upon by the
donor A donor in general is a person, organization or government which donates something voluntarily. The term is usually used to represent a form of pure altruism, but is sometimes used when the payment for a service is recognized by all parties as rep ...
and receiving countries. In this classification, aid can be a
gift A gift or a present is an item given to someone without the expectation of payment or anything in return. An item is not a gift if that item is already owned by the one to whom it is given. Although gift-giving might involve an expectation ...
, a
grant Grant or Grants may refer to: Places *Grant County (disambiguation) Australia * Grant, Queensland, a locality in the Barcaldine Region, Queensland, Australia United Kingdom * Castle Grant United States * Grant, Alabama * Grant, Inyo County, ...
, a low or no interest loan, or a combination of these. The terms of foreign aid are oftentimes influenced by the motives of the giver: a sign of
diplomatic Diplomatics (in American English, and in most anglophone countries), or diplomatic (in British English), is a scholarly discipline centred on the critical analysis of documents: especially, historical documents. It focuses on the conventions, p ...
approval, to reward a
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government i ...
for behaviour desired by the donor, to extend the donor's cultural influence, to enhance
infrastructure Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
needed by the donor for the extraction of resources from the recipient country, or to gain other kinds of
commercial Commercial may refer to: * a dose of advertising conveyed through media (such as - for example - radio or television) ** Radio advertisement ** Television advertisement * (adjective for:) commerce, a system of voluntary exchange of products and s ...
access.


Sources

Aid can also be classified according to its source. While government aid is generally called foreign aid, aid that originates in institutions of a religious nature is often termed
faith-based foreign aid Faith-based may refer to: * Faith-based organization * Faith-based community organizing * Faith-based school * White House Office of Faith-Based and Neighborhood Partnerships * Faith Based (film) ''Faith Based'' is a 2020 American comedy fil ...
(some examples are,
Salvation Army Salvation (from Latin: ''salvatio'', from ''salva'', 'safe, saved') is the state of being saved or protected from harm or a dire situation. In religion and theology, ''salvation'' generally refers to the deliverance of the soul from sin and its ...
,
Catholic Relief Services Catholic Relief Services (CRS) is the international humanitarian agency of the Catholic community in the United States. Founded in 1943 by the Bishops of the United States, the agency provides assistance to 130 million people in more than 110 ...
,etc, etc). . Aid from various sources can reach recipients through bilateral or multilateral delivery systems. "Bilateral" refers to government to government transfers. "Multilateral" institutions, such as the World Bank or
UNICEF UNICEF (), originally called the United Nations International Children's Emergency Fund in full, now officially United Nations Children's Fund, is an agency of the United Nations responsible for providing humanitarian and developmental aid to c ...
, pool aid from one or more sources and disperse it among many recipients. International aid in the form of gifts by individuals or businesses (aka, "private giving") are generally administered by
charities A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, religious or other activities serving the public interest or common good). The legal definition of a ch ...
or philanthropic organizations who batch them and then channel these to the recipient country.


Urgency

Aid may be also classified based on urgency into emergency aid and development aid. Emergency aid is rapid assistance given to a people in immediate distress by individuals, organizations, or governments to relieve suffering, during and after man-made emergencies (like
war War is an intense armed conflict between states, governments, societies, or paramilitary groups such as mercenaries, insurgents, and militias. It is generally characterized by extreme violence, destruction, and mortality, using regular o ...
s) and
natural disaster A natural disaster is "the negative impact following an actual occurrence of natural hazard in the event that it significantly harms a community". A natural disaster can cause loss of life or damage property, and typically leaves some econ ...
s. The term often carries an international connotation, but this is not always the case. It is often distinguished from
development aid Development aid is a type of foreign/international/overseas aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries. Closely-related concepts include: develop ...
by being focused on relieving suffering caused by natural disaster or conflict, rather than removing the root causes of poverty or vulnerability. Development aid is aid given to support development in general which can be
economic development In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and ...
or social development in
developing countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
. It is distinguished from
humanitarian aid Humanitarian aid is material and logistic assistance to people who need help. It is usually short-term help until the long-term help by the government and other institutions replaces it. Among the people in need are the homeless, refugees, and v ...
as being aimed at alleviating poverty in the long term, rather than alleviating suffering in the short term.


Emergency aid

The provision of emergency humanitarian aid consists of the provision of vital services (such as food aid to prevent
starvation Starvation is a severe deficiency in caloric energy intake, below the level needed to maintain an organism's life. It is the most extreme form of malnutrition. In humans, prolonged starvation can cause permanent organ damage and eventually, de ...
) by aid agencies, and the provision of funding or in-kind services (like logistics or transport), usually through aid agencies or the government of the affected country. Humanitarian aid is distinguished from
humanitarian intervention Humanitarian intervention is the use or threat of military force by a state (or states) across borders with the intent of ending severe and widespread human rights violations in a state which has not given permission for the use of force. Human ...
, which involves armed forces protecting civilians from violent oppression or
genocide Genocide is the intentional destruction of a people—usually defined as an ethnic, national, racial, or religious group—in whole or in part. Raphael Lemkin coined the term in 1944, combining the Greek word (, "race, people") with the ...
by state-supported actors. The United Nations
Office for the Coordination of Humanitarian Affairs The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) is a United Nations (UN) body established in December 1991 by the General Assembly to strengthen the international response to complex emergencies and natural disaster ...
(OCHA) is mandated to coordinate the international humanitarian response to a natural disaster or complex emergency acting on the basis of the United Nations General Assembly Resolution 46/182. The
Geneva Conventions upright=1.15, Original document in single pages, 1864 The Geneva Conventions are four treaties, and three additional protocols, that establish international legal standards for humanitarian treatment in war. The singular term ''Geneva Conv ...
give a mandate to the
International Committee of the Red Cross The International Committee of the Red Cross (ICRC; french: Comité international de la Croix-Rouge) is a humanitarian organization which is based in Geneva, Switzerland, and it is also a three-time Nobel Prize Laureate. State parties (signato ...
and other impartial humanitarian organizations to provide assistance and protection of civilians during times of war. The ICRC, has been given a special role by the
Geneva Conventions upright=1.15, Original document in single pages, 1864 The Geneva Conventions are four treaties, and three additional protocols, that establish international legal standards for humanitarian treatment in war. The singular term ''Geneva Conv ...
with respect to the visiting and monitoring of prisoners of war.


Development aid

Development aid is given by governments through individual countries' international aid agencies and through multilateral institutions such as the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, and by individuals through
development charities A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in ...
. For donor nations, development aid also has strategic value; improved living conditions can positively effects global security and economic growth.
Official Development Assistance Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It ...
(ODA) is a commonly used measure of developmental aid.


Intended use

Aid given is generally intended for use by a specific end. From this perspective it may be called: * Project aid: Aid given for a specific purpose; e.g. building materials for a new school. * Programme aid: Aid given for a specific sector; e.g. funding of the education sector of a country. **
Budget support Budget support is a particular way of giving international development aid, also known as an aid instrument or aid modality. With budget support, money is given directly to a recipient country government, usually from a donor government. Budget s ...
: A form of Programme Aid that is directly channelled into the financial system of the recipient country. * Sector-wide Approaches (SWAPs): A combination of Project aid and Programme aid/Budget Support; e.g. support for the education sector in a country will include both funding of education projects (like school buildings) and provide funds to maintain them (like school books). * Technical assistance: Aid involving highly educated or trained personnel, such as doctors, who are moved into a developing country to assist with a program of development. Can be both programme and project aid. * Food aid: Food is given to countries in urgent need of food supplies, especially if they have just experienced a natural disaster. Food aid can be provided by importing food from the donor, buying food locally, or providing cash. * International research, such as research that used for the
green revolution The Green Revolution, also known as the Third Agricultural Revolution, was a period of technology transfer initiatives that saw greatly increased crop yields and agricultural production. These changes in agriculture began in developed countrie ...
or
vaccine A vaccine is a biological preparation that provides active acquired immunity to a particular infectious or malignant disease. The safety and effectiveness of vaccines has been widely studied and verified.
s.


Official development assistance

Official development assistance (ODA) is a term coined by the
Development Assistance Committee The Organisation for Economic Co-operation and Development's (OECD) Development Assistance Committee (DAC) is a forum to discuss issues surrounding aid, development and poverty reduction in developing countries. It describes itself as being the ...
(DAC) of the
Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
(OECD) to measure aid. ODA refers to aid from national governments for promoting economic development and welfare in low and middle income countries. ODA can be bilateral or multilateral. This aid is given as either
grants Grant or Grants may refer to: Places *Grant County (disambiguation) Australia * Grant, Queensland, a locality in the Barcaldine Region, Queensland, Australia United Kingdom *Castle Grant United States * Grant, Alabama * Grant, Inyo County, ...
, where no repayment is required, or as concessional
loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that ...
s, where interest rates are lower than market rates. Loan repayments to multilateral institutions are pooled and redistributed as new loans. Additionally, debt relief, partial or total cancellation of loan repayments, is often added to total aid numbers even though it is not an actual transfer of funds. It is compiled by the Development Assistance Committee. The
United Nations The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and security, develop friendly relations among nations, achieve international cooperation, and be a centre for harmoni ...
, the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
, and many
scholars A scholar is a person who pursues academic and intellectual activities, particularly academics who apply their intellectualism into expertise in an area of study. A scholar can also be an academic, who works as a professor, teacher, or researche ...
use the DAC's ODA figure as their main aid figure because it is easily available and reasonably consistently calculated over time and between countries. The DAC classifies aid in three categories: *
Official Development Assistance Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It ...
(ODA): Development aid provided to
developing countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
(on the "Part I" list) and
international organizations An international organization or international organisation (see spelling differences), also known as an intergovernmental organization or an international institution, is a stable set of norms and rules meant to govern the behavior of states a ...
with the clear aim of
economic development In the economics study of the public sector, economic and social development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and ...
. * ''Official Aid'' (OD): Development aid provided to developed countries (on the "Part II" list). * ''Other Official Flows'' (OOF): Aid which does not fall into the other two categories, either because it is not aimed at development, or it consists of more than 75% loan (rather than grant). Aid is often ''pledged'' at one point in time, but ''disbursements'' (financial transfers) might not arrive until later. In 2009,
South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
became the first major recipient of ODA from the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
to turn into a major donor. The country now provides over $1 billion in aid annually.


Not included as international aid

Most monetary flows between nations are not counted as aid. These include market-based flows such as
foreign direct investment A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct c ...
s and portfolio investments,
remittance A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes wi ...
s from
migrant worker A migrant worker is a person who migrates within a home country or outside it to pursue work. Migrant workers usually do not have the intention to stay permanently in the country or region in which they work. Migrant workers who work outsi ...
s to their families in their home countries, and military aid. In 2009, aid in the form of remittances by migrant workers in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
to their international families was twice as large as that country's humanitarian aid.
The World Bank The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Gr ...
reported that, worldwide, foreign workers sent $328 billion from richer to poorer countries in 2008, over twice as much as official aid flows from OECD members. The United States does not count military aid in its foreign aid figures.


Improving aid effectiveness

The High Level Forum is a gathering of aid officials and representatives of donor and recipient countries. Its
Paris Declaration on Aid Effectiveness Four high level forums on aid effectiveness were held between 2003 and 2011 as part of a "continuous effort towards modernising, deepening and broadening development co-operation and the delivery of aid" coordinated through the OECD. They took p ...
outlines rules to improve the quality of aid.


Conditionalities

A major proportion of aid from donor nations is tied, mandating that a receiving nation spend on products and expertise originating only from the donor country.
Eritrea Eritrea ( ; ti, ኤርትራ, Ertra, ; ar, إرتريا, ʾIritriyā), officially the State of Eritrea, is a country in the Horn of Africa region of Eastern Africa, with its capital and largest city at Asmara. It is bordered by Ethiopi ...
discovered that it would be cheaper to build its network of railways with local expertise and resources rather than to spend aid money on foreign consultants and engineers. US law, backed by strong farm interests, requires
food aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. ...
be spent on buying food from the US rather than locally, and, as a result, half of what is spent is used on
transport Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land ( rail and road), water, cable, pipelin ...
. As a result, tying aid is estimated to increase the cost of aid by 15–30%. Oxfam America and American Jewish World Service report that reforming US food aid programs could extend food aid to an additional 17.1 million people around the world. The
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
and the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
, as primary holders of developing countries' debt, attach
structural adjustment Structural adjustment programs (SAPs) consist of loans (structural adjustment loans; SALs) provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their purpose is to adjust the co ...
conditionalities to loans which generally include the elimination of state subsidies and the
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of
state services A public service is any Service (economics), service intended to address specific needs pertaining to the aggregate members of a community. Public services are available to people within a government jurisdiction as provided directly through pub ...
. For example, the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
presses poor nations to eliminate subsidies for
fertilizer A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
even while many farmers cannot afford them at market prices. In the case of
Malawi Malawi (; or aláwi Tumbuka: ''Malaŵi''), officially the Republic of Malawi, is a landlocked country in Southeastern Africa that was formerly known as Nyasaland. It is bordered by Zambia to the west, Tanzania to the north and northe ...
, almost five million of its 13 million people used to need emergency food aid. However, after the government changed policy and subsidies for fertilizer and seed were introduced, farmers produced record-breaking corn harvests in 2006 and 2007 as production leaped to 3.4 million in 2007 from 1.2 million in 2005, making Malawi a major food exporter. In the former
Soviet The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, ...
states, the reconfiguration of public financing in their transition to a market economy called for reduced spending on health and education, sharply increasing poverty. In their April 2002 publication, Oxfam Report reveals that aid tied to trade liberalization by the donor countries such as the European Union with the aim of achieving economic objective is becoming detrimental to developing countries. For example, the EU subsidizes its agricultural sectors in the expense of Latin America who must liberalize trade in order to qualify for aid. Latin America, a region with a comparative advantage on agriculture and a great reliance on its agricultural export sector, loses $4 billion annually due to EU farming subsidy policies. Carlos Santiso advocates a "radical approach in which donors cede control to the recipient country".


Cash aid versus in-kind aid

A report by a High Level Panel on Humanitarian Cash Transfers found that only 6% of aid is delivered in the form of cash or vouchers. But there is a growing realization among aid groups that, for locally available goods, giving cash or cash vouchers instead of imported goods is a cheaper, faster, and more efficient way to deliver aid. Evidence shows that cash can be more transparent, more accountable, more cost effective, help support local markets and economies, and increase financial inclusion and give people more dignity and choice. Sending cash is cheaper as it does not have the same transaction costs as shipping goods. Sending cash is also faster than shipping the goods. In 2009 for sub-Saharan Africa, food bought locally by the WFP cost 34 percent less and arrived 100 days faster than food sent from the United States, where buying food from the United States is required by law. Cash aid also helps local food producers, usually the poorest in their countries, while imported food may damage their livelihoods and risk continuing hunger in the future. Unconditional cash transfers, for example, appear to be an effective intervention for reducing extreme poverty, while at the same time also improving health and education outcomes. The World Food Program (WFP), the biggest non-governmental distributor of food, announced that it will begin distributing cash and vouchers instead of food in some areas, which
Josette Sheeran Josette Sheeran (born 12 June 1954) is an American non-profit executive and diplomat who served in the United States Department of State. Sheeran serves as the seventh president and CEO of Asia Society since June 10, 2013. Sheeran was also the Uni ...
, the WFP's executive director, described as a "revolution" in food aid.


Coordination

While the number of Non-governmental Organization have increased dramatically over the past few decades, fragmentation in aid policy is an issue. Because of such fragmentation, health workers in several African countries, for example, say they are so busy meeting western delegates that they can only do their proper jobs in the evening. One of the Paris Declaration's priorities is to reduce systems of aid that are "parallel" to local systems. For example,
Oxfam Oxfam is a British-founded confederation of 21 independent charitable organizations focusing on the alleviation of global poverty, founded in 1942 and led by Oxfam International. History Founded at 17 Broad Street, Oxford, as the Oxford Co ...
reported that, in Mozambique, donors are spending $350 million a year on 3,500 technical consultants, which is enough to hire 400,000 local civil servants, weakening local capacity. Between 2005 and 2007, the number of parallel systems did fall, by about 10% in 33 countries. In order to improve coordination and reduce parallel systems, the Paris Declaration suggests that aid recipient countries lay down a set of national development priorities and that aid donors fit in with those plans.


Aid priorities

Laurie Garret, author of the article "The Challenge of Global Health" points out that the current aid and resources are being targeted at very specific, high-profile diseases, rather than at general
public health Public health is "the science and art of preventing disease, prolonging life and promoting health through the organized efforts and informed choices of society, organizations, public and private, communities and individuals". Analyzing the det ...
. Aid is "stovepiped" towards narrow, short-term goals relating to particular programs or diseases such as increasing the number of people receiving anti-retroviral treatment, and increasing distribution of bed nets. These are band aid solutions to larger problems, as it takes healthcare systems and infrastructure to create significant change. Donors lack the understanding that effort should be focused on broader measures that affect general well-being of the population, and substantial change will take generations to achieve. Aid often does not provide maximum benefit to the recipient, and reflects the interests of the donor. Furthermore, consider the breakdown, where aid goes and for what purposes. In 2002, total gross foreign aid to all developing countries was $76 billion. Dollars that do not contribute to a country's ability to support basic needs interventions are subtracted. Subtract $6 billion for debt relief grants. Subtract $11 billion, which is the amount developing countries paid to developed nations in that year in the form of loan repayments. Next, subtract the aid given to middle income countries, $16 billion. The remainder, $43 billion, is the amount that developing countries received in 2002. But only $12 billion went to low-income countries in a form that could be deemed budget support for basic needs. When aid is given to the Least Developed Countries who have good governments and strategic plans for the aid, it is thought that it is more effective.


Logistics

Humanitarian aid Humanitarian aid is material and logistic assistance to people who need help. It is usually short-term help until the long-term help by the government and other institutions replaces it. Among the people in need are the homeless, refugees, and v ...
is argued to often not reach those who are intended to receive it. For example, a report composed by the World Bank in 2006 stated that an estimated half of the funds donated towards health programs in sub-Saharan Africa did not reach the clinics and hospitals. Money is paid out to fake accounts, prices are increased for transport or warehousing, and drugs are sold to the black market. Another example is in Ghana, where approximately 80% of donations do not go towards their intended purposes. This type of corruption only adds to the criticism of aid, as it is not helping those who need it, and may be adding to the problem. Only about one fifth of U.S. aid goes to countries classified by the OECD as 'least developed.' This "pro-rich" trend is not unique to the United States.Sachs, Jeffrey D. 2005. The End of Poverty: Economic Possibilities for Our Time. New York: Penguin Books.Singer, Peter. 2009.
The Life You Can Save ''The Life You Can Save: Acting Now to End World Poverty'' is a 2009 book by Australian philosopher Peter Singer, in which the author argues that citizens of affluent nations are behaving immorally if they do not act to end the poverty they know ...
. New York:Random House.
According to Collier, "the middle income countries get aid because they are of much more commercial and political interest than the tiny markets and powerlessness of the bottom billion." What this means is that, at the most basic level, aid is not targeting the most extreme poverty. The logistics in which the delivery of humanitarian occurs can be problematic. For example, an earthquake in 2003 in
Bam, Iran Bam ( fa, بم) is a city and capital of Bam County, Kerman Province, Iran. At the 2006 census, its population was 73,823, in 19,572 families. The modern Iranian city of Bam surrounds the Bam citadel. Before the 2003 earthquake the offici ...
left tens of thousands of people in need of disaster zone aid. Although aid was flown in rapidly, regional belief systems, cultural backgrounds and even language seemed to have been omitted as a source of concern. Items such as religiously prohibited pork, and non-generic forms of medicine that lacked multilingual instructions came flooding in as relief. An implementation of aid can easily be problematic, causing more problems than it solves. Considering transparency, the amount of aid that is recorded accurately has risen from 42% in 2005 to 48% in 2007.


Improving the economic efficiency of aid

Currently, donor institutions make proposals for aid packages to recipient countries. The recipient countries then make a plan for how to use the aid based on how much money has been given to them. Alternatively,
NGO A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...
's receive funding from private sources or the government and then implement plans to address their specific issues. According to Sachs, in the view of some scholars, this system is inherently ineffective. According to Sachs, we should redefine how we think of aid. The first step should be to learn what developing countries hope to accomplish and how much money they need to accomplish those goals. Goals should be made with the
Millennium Development Goals The Millennium Development Goals (MDGs) were eight international development goals for the year 2015 that had been established following the Millennium Summit of the United Nations in 2000, following the adoption of the United Nations Millenn ...
in mind for these furnish real metrics for providing basic needs. The "actual transfer of funds must be based on rigorous, country-specific plans that are developed through open and consultative processes, backed by
good governance Good governance is the process of measuring how public institutions conduct public affairs and manage public resources and guarantee the realization of human rights in a manner essentially free of abuse and corruption and with due regard for th ...
in the recipient countries, as well as careful planning and evaluation." Possibilities are also emerging as some developing countries are experiencing rapid economic growth, they are able to provide their own expertise gained from their recent transition. This knowledge transfer can be seen in donors, such as Brazil, whose $1 billion in aid outstrips that of many traditional donors. Brazil provides most of its aid in the form of technical expertise and knowledge transfers. This has been described by some observers as a 'global model in waiting'.


Criticism

Statistical studies have produced widely differing assessments of the correlation between aid and economic growth: there is little consensus with some studies find a positive correlation while others find either no correlation or a negative correlation. One consistent finding is that project aid tends to cluster in richer parts of countries, meaning most aid is not given to poor countries or poor recipients. In the case of
Africa Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 6% of Earth's total surface area ...
, Asante (1985) gives the following assessment:
Summing up the experience of African countries both at the national and at the regional levels it is no exaggeration to suggest that, on balance, foreign assistance, especially foreign capitalism, has been somewhat deleterious to African development. It must be admitted, however, that the pattern of development is complex and the effect upon it of foreign assistance is still not clearly determined. But the limited evidence available suggests that the forms in which foreign resources have been extended to Africa over the past twenty-five years, insofar as they are concerned with economic development, are, to a great extent, counterproductive.
Peter Singer Peter Albert David Singer (born 6 July 1946) is an Australian moral philosopher, currently the Ira W. DeCamp Professor of Bioethics at Princeton University. He specialises in applied ethics and approaches ethical issues from a secular ...
argues that over the last three decades, "aid has added around one percentage point to the annual growth rate of the bottom billion." He argues that this has made the difference between "stagnation and severe cumulative decline." Aid can make progress towards reducing poverty worldwide, or at least help prevent cumulative decline. Despite the intense criticism on aid, there are some promising numbers. In 1990, approximately 43 percent of the world's population was living on less than $1.25 a day and has dropped to about 16 percent in 2008. Maternal deaths have dropped from 543,000 in 1990 to 287,000 in 2010. Under-five mortality rates have also dropped, from 12 million in 1990 to 6.9 million in 2011. Although these numbers alone sound promising, there is a gray overcast: many of these numbers actually are falling short of the Millennium Development Goals. There are only a few goals that have already been met or projected to be met by the 2015 deadline. The economist
William Easterly William Russell Easterly (born September 7, 1957) is an American economist, specializing in economic development. He is a professor of economics at New York University, joint with Africa House, and co-director of NYU’s Development Research Inst ...
and others have argued that aid can often distort incentives in poor countries in various harmful ways. Aid can also involve inflows of money to poor countries that have some similarities to inflows of money from natural resources that provoke the
resource curse The resource curse, also known as the paradox of plenty or the poverty paradox, is the phenomenon of countries with an abundance of natural resources (such as fossil fuels and certain minerals) having less economic growth, less democracy, or worse ...
. This is partially because aid given in the form of foreign currency causes exchange rate to become less competitive and this impedes the growth of manufacturing sector which is more conducive in the cheap labour conditions. Aid also can take the pressure off and delay the painful changes required in the economy to shift from agriculture to manufacturing. Some believe that aid is offset by other economic programs such as
agricultural subsidies An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural commodities, and influence the ...
.
Mark Malloch Brown George Mark Malloch Brown, Baron Malloch-Brown (born 16 September 1953) is a British diplomat, communications consultant, journalist and former politician serving as president of Open Society Foundations since 2021, having previously served as ...
, former head of the United Nations Development Program, estimated that farm subsidies cost poor countries about US$50 billion a year in lost agricultural exports:
It is the extraordinary distortion of global trade, where the West spends $360 billion a year on protecting its agriculture with a network of subsidies and tariffs that costs developing countries about US$50 billion in potential lost agricultural exports. Fifty billion dollars is the equivalent of today's level of development assistance.
Some have argued that the major international aid organizations have formed an aid
cartel A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mos ...
. In response to aid critics, a movement to reform U.S. foreign aid has started to gain momentum. In the United States, leaders of this movement include the
Center for Global Development The Center for Global Development (CGD) is a nonprofit think tank based in Washington, D.C., and London that focuses on international development. History It was founded in November 2001 by former senior U.S. official Edward W. Scott, dire ...
, Oxfam America, the
Brookings Institution The Brookings Institution, often stylized as simply Brookings, is an American research group founded in 1916. Located on Think Tank Row in Washington, D.C., the organization conducts research and education in the social sciences, primarily in e ...
, InterAction, and
Bread for the World Bread for the World is a non-partisan, Christian advocacy organization based in the United States that advocates for policy changes to end hunger. Bread for the World provides resources to help individuals advocate to end hunger, which might inc ...
. The various organizations have united to call for a new
Foreign Assistance Act The Foreign Assistance Act (, et seq.) is a United States law governing foreign aid policy. It outlined the political and ideological principles of U.S. foreign aid, significantly overhauled and reorganized the structure U.S. foreign assistance pr ...
, a national development strategy, and a new cabinet-level department for development. In November 2012, a spoof charity music video was produced by a South African rapper named Breezy V. The video "Africa for Norway" promoting "Radi-Aid" was a parody of Western charity initiatives like Band Aid which, he felt, exclusively encouraged small donations to starving children, creating a stereotypically negative view of the continent. Aid in his opinion should be about funding initiatives and projects with emotional motivation as well as money. The parody video shows Africans getting together to campaign for Norwegian people suffering from frostbite by supplying them with unwanted radiators. Anthropologist and researcher Jason Hickel concludes from a 2016 report by the US-based
Global Financial Integrity Raymond W. Baker (born October 30, 1935) is an American businessman, scholar, author, and "authority on financial crime." He is the founder and president of Global Financial Integrity, a research and advocacy organization in Washington, DC workin ...
(GFI) and the Centre for Applied Research at the Norwegian School of Economics that
the usual development narrative has it backwards. Aid is effectively flowing in reverse. Rich countries aren’t developing poor countries; poor countries are developing rich ones... The aid narrative begins to seem a bit naïve when we take these reverse flows into account. It becomes clear that aid does little but mask the maldistribution of resources around the world. It makes the takers seem like givers, granting them a kind of moral high ground while preventing those of us who care about global poverty from understanding how the system really works.


Unintended consequences

Some of the unintended effects include labor and production
disincentive A disincentive is something that discourages an individual from performing an action. It is the antonym of incentive. Disincentives may fall within the scope of economics, social issues or politics. Economic Economic disincentives are any factors ...
s, changes in recipients' food consumption patterns and natural resources use patterns, distortion of social safety nets, distortion of
NGO A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...
operational activities, price changes, and trade displacement. These issues arise from targeting inefficacy and poor timing of aid programs.
Food aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. ...
can harm producers by driving down prices of local products, whereas the producers are not themselves beneficiaries of food aid. Unintentional harm occurs when food aid arrives or is purchased at the wrong time, when food aid distribution is not well-targeted to food-insecure households, and when the local market is relatively poorly integrated with broader national, regional and global markets. The use of food aid for emergencies can reduce the unintended consequences, although it can contribute to other associated with the use of food as a weapon or prolonging or intensifying the duration of civil conflicts. Also, aid attached to institution building and democratization can often result in the consolidation of autocratic governments when effective monitoring is absent.


Increasing conflict duration

International aid organizations identify theft by armed forces on the ground as a primary unintended consequence through which food aid and other types of humanitarian aid promote conflict. Food aid usually has to be transported across large geographic territories and during the transportation it becomes a target for armed forces, especially in countries where the ruling government has limited control outside of the capital. Accounts from
Somalia Somalia, , Osmanya script: 𐒈𐒝𐒑𐒛𐒐𐒘𐒕𐒖; ar, الصومال, aṣ-Ṣūmāl officially the Federal Republic of SomaliaThe ''Federal Republic of Somalia'' is the country's name per Article 1 of thProvisional Constitut ...
in the early 1990s indicate that between 20 and 80 percent of all food aid was stolen, looted, or confiscated.Nunn, Nathan, and Nancy Qian. "US Food Aid and Civil Conflict". ''American Economic Review'', vol. 104, no. 6, 2014, pp. 1630–1666., doi:10.1257/aer.104.6.1630. In the former
Yugoslavia Yugoslavia (; sh-Latn-Cyrl, separator=" / ", Jugoslavija, Југославија ; sl, Jugoslavija ; mk, Југославија ;; rup, Iugoslavia; hu, Jugoszlávia; rue, label= Pannonian Rusyn, Югославия, translit=Juhoslavij ...
, the UN Refugee Agency (UNHCR) lost up to 30 percent of the total value of aid to Serbian armed forces. On top of that 30 percent, bribes were given to
Croatia , image_flag = Flag of Croatia.svg , image_coat = Coat of arms of Croatia.svg , anthem = " Lijepa naša domovino"("Our Beautiful Homeland") , image_map = , map_caption = , capi ...
n forces to pass their roadblocks in order to reach
Bosnia Bosnia and Herzegovina ( sh, / , ), abbreviated BiH () or B&H, sometimes called Bosnia–Herzegovina and Pars pro toto#Geography, often known informally as Bosnia, is a country at the crossroads of Southern Europe, south and southeast Euro ...
. The value of the stolen or lost provisions can exceed the value of the food aid alone since convoy vehicles and telecommunication equipment are also stolen. MSF Holland, international aid organization operating in
Chad Chad (; ar, تشاد , ; french: Tchad, ), officially the Republic of Chad, '; ) is a landlocked country at the crossroads of North and Central Africa. It is bordered by Libya to the north, Sudan to the east, the Central African Republic ...
and
Darfur Darfur ( ; ar, دار فور, Dār Fūr, lit=Realm of the Fur) is a region of western Sudan. ''Dār'' is an Arabic word meaning "home f – the region was named Dardaju ( ar, دار داجو, Dār Dājū, links=no) while ruled by the Daju ...
, underscored the strategic importance of these goods, stating that these "vehicles and communications equipment have a value beyond their monetary worth for armed actors, increasing their capacity to wage war" A famous instance of humanitarian aid unintentionally helping rebel groups occurred during the Nigeria-Biafra civil war in the late 1960s, where the rebel leader
Odumegwu Ojukwu Chukwuemeka "Emeka" Odumegwu Ojukwu (4 November 1933 – 26 November 2011) was a Nigerian military officer, statesman and politician who served as the military governor of the Eastern Region of Nigeria in 1966 and the president of the s ...
only allowed aid to enter the region of
Biafra Biafra, officially the Republic of Biafra, was a partially recognised secessionist state in West Africa that declared independence from Nigeria and existed from 1967 until 1970. Its territory consisted of the predominantly Igbo-populated f ...
if it was shipped on his planes. These shipments of humanitarian aid helped the rebel leader to circumvent the siege on Biafra placed by the Nigerian government. These stolen shipments of humanitarian aid caused the Biafran civil war to last years longer than it would have without the aid, claim experts. The most well-known instances of aid being seized by local warlords in recent years come from
Somalia Somalia, , Osmanya script: 𐒈𐒝𐒑𐒛𐒐𐒘𐒕𐒖; ar, الصومال, aṣ-Ṣūmāl officially the Federal Republic of SomaliaThe ''Federal Republic of Somalia'' is the country's name per Article 1 of thProvisional Constitut ...
, where food aid is funneled to the Shabab, a Somali militant group that controls much of Southern Somalia. Moreover, reports reveal that Somali contractors for aid agencies have formed a cartel and act as important power brokers, arming opposition groups with the profits made from the stolen aid"
Rwanda Rwanda (; rw, u Rwanda ), officially the Republic of Rwanda, is a landlocked country in the Great Rift Valley of Central Africa, where the African Great Lakes region and Southeast Africa converge. Located a few degrees south of the Equator ...
n government appropriation of food aid in the early 1990s was so problematic that aid shipments were canceled multiple times. In
Zimbabwe Zimbabwe (), officially the Republic of Zimbabwe, is a landlocked country located in Southeast Africa, between the Zambezi and Limpopo Rivers, bordered by South Africa to the south, Botswana to the south-west, Zambia to the north, and ...
in 2003,
Human Rights Watch Human Rights Watch (HRW) is an international non-governmental organization, headquartered in New York City, that conducts research and advocacy on human rights. The group pressures governments, policy makers, companies, and individual human ...
documented examples of residents being forced to display ZANU-PF Party membership cards before being given government food aid. In eastern
Zaire Zaire (, ), officially the Republic of Zaire (french: République du Zaïre, link=no, ), was a Congolese state from 1971 to 1997 in Central Africa that was previously and is now again known as the Democratic Republic of the Congo. Zaire was, ...
, leaders of the Hema ethnic group allowed the arrival of international aid organizations only upon agreement not give aid to the Lendu (opposition of Hema). Humanitarian aid workers have acknowledged the threat of stolen aid and have developed strategies for minimizing the amount of theft en route. However, aid can fuel conflict even if successfully delivered to the intended population as the recipient populations often include members of
rebel groups Rebellion, uprising, or insurrection is a refusal of obedience or order. It refers to the open resistance against the orders of an established authority. A rebellion originates from a sentiment of indignation and disapproval of a situation and ...
or
militia groups A militia () is generally an army or some other fighting organization of non- professional soldiers, citizens of a country, or subjects of a state, who may perform military service during a time of need, as opposed to a professional force of ...
, or aid is "taxed" by such groups. Academic research emphatically demonstrates that on average food aid promotes civil conflict. Namely, increase in US food aid leads to an increase in the incidence of armed civil conflict in the recipient country. Another correlation demonstrated is food aid prolonging existing conflicts, specifically among countries with a recent history of civil conflict. However, it is important to note that this does not find an effect on conflict in countries without a recent history of civil conflict. Moreover, different types of international aid other than food which is easily stolen during its delivery, namely technical assistance and cash transfers, can have different effects on civil conflict. Community-driven development (CDD) programs have become one of the most popular tools for delivering development aid. In 2012, the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
supported 400 CDD programs in 94 countries, valued at US$30 billion. Academic research scrutinizes the effect of community-driven development programs on civil conflict. The
Philippines The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no), * bik, Republika kan Filipinas * ceb, Republika sa Pilipinas * cbk, República de Filipinas * hil, Republ ...
’ flagship development program
KALAHI-CIDSS The Philippines' Department of Social Welfare and Development ( fil, Kagawaran ng Kagalingan at Pagpapaunlad Panlipunan, Kagawaran ng Kagalingang Panlipunan at Pagpapaunlad, abbreviated as DSWD) is the executive department of the Philippine Go ...
is concluded to have led to an increase in violent conflict in the country. After the program's start, some municipalities experienced and statistically significant and large increase in casualties, as compared to other municipalities who were not part of the CDD. Casualties suffered by government forces as a result of insurgent-initiated attacks increased significantly. These results are consistent with other examples of humanitarian aid exacerbating civil conflict. One explanation is that insurgents attempt to sabotage CDD programs for political reasons – successful implementation of a government-supported project could weaken the insurgents' position. Related findings of Beath, Christia, and Enikolopov further demonstrate that a successful community-driven development program increased support for the government in Afghanistan by exacerbating conflict in the short term, revealing an unintended consequence of the aid.


Dependency and other economic effects

One of the economic cases against aid transfers, in the form of food or other resources, is that it discourages recipients from working, everything else held constant. This claim undermines the support for transfers, as heated debates over the past decade about domestic welfare programs in
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
and
North America North America is a continent in the Northern Hemisphere and almost entirely within the Western Hemisphere. It is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the southeast by South America and th ...
show. Targeting errors of inclusion are said to magnify the labor market disincentive effects inherent to food aid (or any other form of transfer) by providing benefits to those who are most able and willing to turn transfers into leisure instead of increased food consumption. Labor distortion can arise when Food-For-Work (FFW) Programs are more attractive than work on recipients' own farms/businesses, either because the FFW pays immediately, or because the household considers the payoffs to the FFW project to be higher than the returns to labor on its own plots. Food aid programs hence take productive inputs away from local private production, creating a distortion due to substitution effects, rather than income effects. Beyond labor disincentive effects, food aid can have the unintended consequence of discouraging household-level production. Poor timing of aid and FFW wages that are above market rates cause negative dependency by diverting labor from local private uses, particularly if FFW obligations decrease labor on a household's own enterprises during a critical part of the production cycle.This type of disincentive impacts not only food aid recipients but also producers who sell to areas receiving food aid flows. FFW programs are often used to counter a perceived dependency syndrome associated with freely distributed food. However, poorly designed FFW programs may cause more risk of harming local production than the benefits of free food distribution. In structurally weak economies, FFW program design is not as simple as determining the appropriate wage rate. Empirical evidence from rural
Ethiopia Ethiopia, , om, Itiyoophiyaa, so, Itoobiya, ti, ኢትዮጵያ, Ítiyop'iya, aa, Itiyoppiya officially the Federal Democratic Republic of Ethiopia, is a landlocked country in the Horn of Africa. It shares borders with Eritrea to the ...
shows that higher-income households had excess labor and thus lower (not higher as expected) value of time, and therefore allocated this labor to FFW schemes in which poorer households could not afford to participate due to labor scarcity. Similarly, FFW programs in
Cambodia Cambodia (; also Kampuchea ; km, កម្ពុជា, UNGEGN: ), officially the Kingdom of Cambodia, is a country located in the southern portion of the Indochinese Peninsula in Southeast Asia, spanning an area of , bordered by Thailand ...
have shown to be an additional, not alternative, source of employment and that the very poor rarely participate due to labor constraints. Furthermore, food aid can drive down local or national
food prices Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices have an impact on producers and consumers of food. Price levels depend on the food production process, including food marketing ...
in at least three ways. #First,
monetization Monetization ( also spelled monetisation) is, broadly speaking, the process of converting something into money. The term has a broad range of uses. In banking, the term refers to the process of converting or establishing something into legal tend ...
of food aid can flood the market, increasing
supply Supply may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as in confidenc ...
. In order to be granted the right to monetize, operational agencies must demonstrate that the recipient country has adequate storage facilities and that the monetized
commodity In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...
will not result in a substantial disincentive in either domestic agriculture or domestic marketing. #Second, households receiving aid may decrease demand for the
commodity In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...
received or for locally produced substitutes or, if they produce substitutes or the commodity received, they may sell more of it. This can be most easily understood by dividing a population in a food aid recipient area into subpopulations based on two criteria: whether or not they receive food aid (recipients vs. non-recipients) and whether they are net sellers or net buyers of food. Because the price they receive for their output is lower, however, net sellers are unambiguously worse off if they do not receive food aid or some other form of compensatory transfer. #Finally, recipients may sell food aid to purchase other necessities or complements, driving down prices of the food aid commodity and its substitutes, but also increasing demand for complements. Most recipient economies are not robust and food aid inflows can cause large price decreases, decreasing producer profits, limiting producers' abilities to pay off debts and thereby diminishing both capacity and incentives to invest in improving agricultural productivity. However, food aid distributed directly or through FFW programs to households in northern
Kenya ) , national_anthem = " Ee Mungu Nguvu Yetu"() , image_map = , map_caption = , image_map2 = , capital = Nairobi , coordinates = , largest_city = Nairobi , ...
during the lean season can foster increased purchase of agricultural inputs such as improved seeds,
fertilizer A fertilizer (American English) or fertiliser (British English; see spelling differences) is any material of natural or synthetic origin that is applied to soil or to plant tissues to supply plant nutrients. Fertilizers may be distinct from ...
and hired labor, thereby increasing
agricultural productivity Agricultural productivity is measured as the ratio of agricultural outputs to inputs. While individual products are usually measured by weight, which is known as crop yield, varying products make measuring overall agricultural output difficu ...
.


Corruption

A 2020 article published in ''Studies in Comparative International Development'' analyzed contract-level data over the period 1998 through 2008 in more than a hundred recipient countries. As a risk indicator for corruption, the study used the prevalence of single bids submitted in "high-risk" competitive tenders for procurement contracts funded by
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
development aid. ("High-risk" tenders are those with a higher degree of World Bank oversight and control; as a result, the study authors noted that "our findings are not representative of all aid spending financed by the World Bank, but only that part where risks are higher" and more stringent oversight thus deemed necessary.) The study authors found "that donor efforts to control corruption in aid spending through national procurement systems, by tightening oversight and increasing market openness, were effective in reducing corruption risks." The study also found that countries with high party system
institutionalization In sociology, institutionalisation (or institutionalization) is the process of embedding some conception (for example a belief, norm, social role, particular value or mode of behavior) within an organization, social system, or society as a who ...
(PSI) and countries with greater state capacity had lower prevalence of single bidding, lending support for "theories of corruption control based on reducing opportunities and increasing constraints on the power of public administrators." A 2018 study published in the ''
Journal of Public Economics The ''Journal of Public Economics'' is a monthly peer-reviewed academic journal covering public economics, with particular emphasis on the application of modern economic theory and methods of quantitative analysis. It provides a forum for discussio ...
'' investigated with Chinese aid projects in Africa increased local-level corruption. Matching
Afrobarometer The Afrobarometer is a pan-African, independent, non-partisan research network that measures public attitudes on economic, political, and social matters in Africa. Its secretariat headquarters are in Accra, Ghana, registered as a limited company ...
data (on perceptions of corruption) to georeferenced data on Chinese development finance project sites, the study found that active Chinese project sites had more widespread local corruption. The study found that the apparent increase in corruption did not appear to be driven by increased economic activity, but rather could be linked to a negative Chinese impact on norms (e.g., the legitimization of corruption).Ann-Sofie Isaksson & Andreas Kotsadam
Chinese aid and local corruption
''Journal of Public Economics'', Vol. 159, March 2018, pp. 146-159.
The study noted that: "Chinese aid stands out from World Bank aid in this respect. In particular, whereas the results indicate that Chinese aid projects fuel local corruption but have no observable impact on short term local economic activity, they suggest that World Bank aid projects stimulate local economic activity without any consistent evidence of it fuelling local corruption."


Changed consumption patterns

Food aid that is relatively inappropriate to local uses can distort consumption patterns. Food aid is usually exported from
temperate climate In geography, the temperate climates of Earth occur in the middle latitudes (23.5° to 66.5° N/S of Equator), which span between the tropics and the polar regions of Earth. These zones generally have wider temperature ranges throughout ...
zones and is often different than the staple crops grown in recipient countries, which usually have a
tropical climate Tropical climate is the first of the five major climate groups in the Köppen climate classification identified with the letter A. Tropical climates are defined by a monthly average temperature of 18 °C (64.4 °F) or higher in the cool ...
. The logic of food export inherently entails some effort to change consumers' preferences, to introduce recipients to new foods and thereby stimulate demand for foods with which recipients were previously unfamiliar or which otherwise represent only a small portion of their diet. Massive shipments of wheat and rice into the West African Sahel during the food crises of the mid-1970s and mid-1980s were widely believed to stimulate a shift in consumer demand from indigenous coarse grains –
millet Millets () are a highly varied group of small-seeded grasses, widely grown around the world as cereal crops or grains for fodder and human food. Most species generally referred to as millets belong to the tribe Paniceae, but some millets a ...
and
sorghum ''Sorghum'' () is a genus of about 25 species of flowering plants in the grass family (Poaceae). Some of these species are grown as cereals for human consumption and some in pastures for animals. One species is grown for grain, while many other ...
– to western crops such as
wheat Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeologi ...
. During the 2000 drought in northern
Kenya ) , national_anthem = " Ee Mungu Nguvu Yetu"() , image_map = , map_caption = , image_map2 = , capital = Nairobi , coordinates = , largest_city = Nairobi , ...
, the price of
changaa Changaa or Chang'aa is a traditional home-brewed spirit, popular in Kenya. It is made by fermentation and distillation from grains like millet, maize and sorghum, and is very potent. Regulation After being illegal in Kenya for many years, the K ...
(a locally distilled alcohol) fell significantly and consumption seems to have increased as a result. This was a result of grain food aid inflows increasing the availability of low-cost inputs to the informal distilling industry.


Natural resource overexploitation

Recent research suggests that patterns of food aid distribution may inadvertently affect the natural environment, by changing consumption patterns and by inducing locational change in
grazing In agriculture, grazing is a method of animal husbandry whereby domestic livestock are allowed outdoors to roam around and consume wild vegetations in order to convert the otherwise indigestible (by human gut) cellulose within grass and ot ...
and other activities. A pair of studies in Northern Kenya found that food aid distribution seems to induce greater spatial concentration of
livestock Livestock are the domesticated animals raised in an agricultural setting to provide labor and produce diversified products for consumption such as meat, eggs, milk, fur, leather, and wool. The term is sometimes used to refer solely to ani ...
around distribution points, causing localized
rangeland Rangelands are grasslands, shrublands, woodlands, wetlands, and deserts that are grazed by domestic livestock or wild animals. Types of rangelands include tallgrass and shortgrass prairies, desert grasslands and shrublands, woodlands, sava ...
degradation, and that food aid provided as whole grain requires more cooking, and thus more fuelwood, stimulating local
deforestation Deforestation or forest clearance is the removal of a forest or stand of trees from land that is then converted to non-forest use. Deforestation can involve conversion of forest land to farms, ranches, or urban use. The most concentrated ...
. The welfare impacts of any food aid-induced changes in food prices are decidedly mixed, underscoring the reality that it is impossible to generate only positive intended effects from an international aid program.


Ulterior agendas

Aid is seldom given from motives of pure
altruism Altruism is the principle and moral practice of concern for the welfare and/or happiness of other human beings or animals, resulting in a quality of life both material and spiritual. It is a traditional virtue in many cultures and a cor ...
; for instance it is often given as a means of supporting an ally in
international politics International relations (IR), sometimes referred to as international studies and international affairs, is the scientific study of interactions between sovereign states. In a broader sense, it concerns all activities between states—such a ...
. It may also be given with the intention of influencing the political process in the receiving nation. Whether one considers such aid helpful may depend on whether one agrees with the agenda being pursued by the donor nation in a particular case. During the conflict between
communism Communism (from Latin la, communis, lit=common, universal, label=none) is a far-left sociopolitical, philosophical, and economic ideology and current within the socialist movement whose goal is the establishment of a communist society, ...
and
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...
in the twentieth century, the champions of those ideologies – the
Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...
and the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
– each used aid to influence the internal politics of other nations, and to support their weaker allies. Perhaps the most notable example was the
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred over $13 billion (equivalent of about $ in ) in economic re ...
by which the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
, largely successfully, sought to pull
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
an nations toward capitalism and away from communism. Aid to underdeveloped countries has sometimes been criticized as being more in the interest of the donor than the recipient, or even a form of
neocolonialism Neocolonialism is the continuation or reimposition of imperialist rule by a state (usually, a former colonial power) over another nominally independent state (usually, a former colony). Neocolonialism takes the form of economic imperialism, ...
. S.K.B'. Asante lists some specific motives a donor may have for giving aid: defence support, market expansion, foreign investment, missionary enterprise, cultural extension. In recent decades, aid by organizations such as the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
and the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
has been criticized as being primarily a tool used to open new areas up to global capitalists, and being only secondarily, if at all, concerned with the wellbeing of the people in the recipient countries.


Vaccine diplomacy


Beyond aid

As a result of these numerous criticisms, other proposals for supporting developing economies and poverty stricken societies. Some analysts, such as researchers at the
Overseas Development Institute ODI (formerly the 'Overseas Development Institute') is a global affairs think tank, founded in 1960. Its mission is "to inspire people to act on injustice and inequality through collaborative research and ideas that matter for people and the ...
, argue that current support for the developing world suffers from a policy incoherence and that while some policies are designed to support the third world, other domestic policies undermine its impact, examples include: * encouraging developing economies to develop their agriculture with a focus on exports is not effective on a global market where key players, such as the US and EU, heavily subsidise their products * providing aid to developing economies' health sectors and the training of personnel is undermined by migration policies in developed countries that encourage the migration of skilled health professionals One measure of this policy incoherence is the Commitment to Development Index (CDI) published by the
Center for Global Development The Center for Global Development (CGD) is a nonprofit think tank based in Washington, D.C., and London that focuses on international development. History It was founded in November 2001 by former senior U.S. official Edward W. Scott, dire ...
. The index measures and evaluates 22 of the world's richest countries on policies that affect developing countries, in addition to simply aid. It shows that development policy is more than just aid; it also takes into account trade, investment, migration, environment, security, and technology. Thus, some states are beginning to go ''Beyond Aid'' and instead seek to ensure there is a policy coherence, for example see
Common Agricultural Policy The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce the ...
reform or
Doha Development Round The Doha Development Round or Doha Development Agenda (DDA) is the trade-negotiation round of the World Trade Organization (WTO) which commenced in November 2001 under then director-general Mike Moore. Its objective was to lower trade barriers ...
. This approach might see the nature of aid change from loans, debt cancellation, budget support etc., to supporting developing countries. This requires a strong political will, however, the results could potentially make aid far more effective and efficient.


The "aid industry"

Private giving includes aid from charities, philanthropic organizations or businesses to recipient countries or programs within recipient countries. Garrett has observed that aid donor organizations have developed their own industry known as the ''"aid industry"''. Private donors to countries in need of aid are a large part of this, by making money while finding the next best solution for the country in need of aid. These private outside donors take away from local entrepreneurship leaving countries in need of aid reliant on them.


Transition out of aid

Researchers looked at how Ghana compares with groups of other countries that have been transitioning out of aid. They talk about how the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
reclassified Ghana from a low income country to a lower middle income country in 2010. They found Ghana experiencing significant improvements across development indicators since early 2000s with different changes for different indicators which is consistent or better than lower middle income country averages.


Marshall Plan

After World War II the Marshall Plan (and similar programs for Asia, and the Point Four program for Latin America) became the major American aid program, and became a model for its foreign aid policies for decades. The U.S. gave away about $20 billion in
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred over $13 billion (equivalent of about $ in ) in economic re ...
grants and other grants and low-interest long-term loans to Western Europe, 1945 to 1951. Historian Michael J. Hogan argues that American aid was critical in stabilizing the economy and politics of Western Europe. It brought in modern management that dramatically increased productivity, and encouraged cooperation between labor and management, and among the member states. Local Communist parties were opposed, and they lost prestige and influence and a role in government. In strategic terms, says Hogan, the Marshall Plan strengthened the West against the possibility of a communist invasion or political takeover. However, the Marshall Plan's role in the rapid recovery has been debated. Most reject the idea that it only miraculously revived Europe, since the evidence shows that a general recovery was already under way thanks to other aid programs from the United States. Economic historians Bradford De Long and
Barry Eichengreen Barry Julian Eichengreen (born 1952) is an American economist and economic historian who holds the title of George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley, where he ha ...
conclude it was, "History's Most Successful Structural Adjustment Program." They state: :It was not large enough to have significantly accelerated recovery by financing investment, aiding the reconstruction of damaged infrastructure, or easing commodity bottlenecks. We argue, however, that the Marshall Plan did play a major role in setting the stage for post-World War II Western Europe's rapid growth. The conditions attached to Marshall Plan aid pushed European political economy in a direction that left its post World War II "mixed economies" with more "market" and less "controls" in the mix. The Soviet Union concentrated on its own recovery. It seized and transferred most of Germany's industrial plants and it exacted war reparations from East Germany, Hungary, Romania, and Bulgaria, using Soviet-dominated joint enterprises. It used trading arrangements deliberately designed to favor the Soviet Union. Moscow controlled the Communist parties that ruled the satellite states, and they followed orders from the Kremlin. Historian Mark Kramer concludes: :The net outflow of resources from eastern Europe to the Soviet Union was approximately $15 billion to $20 billion in the first decade after World War II, an amount roughly equal to the total aid provided by the United States to western Europe under the Marshall Plan.


Academic theories

Since the 1960s, improving the efficiency of foreign aid has been a common topic of academic research. There is debate on whether foreign aid is efficacious, but for the purposes of this article we will ignore that. Given that schema, a common debate is over which factors influence the overall economic efficiency of foreign aid. Indeed, there is debate about whether aid impact should be measured empirically at all, but again, we will limit our scope to increasing the economic efficiency. At the forefront of the aid debate has been the conflict between professor
William Easterly William Russell Easterly (born September 7, 1957) is an American economist, specializing in economic development. He is a professor of economics at New York University, joint with Africa House, and co-director of NYU’s Development Research Inst ...
of New York University and his ideological opposite, Jeffrey Sachs, from Columbia University. Easterly advocates the "searcher's" approach, while Sachs advocates a more top down, broad planned approach. We will discuss both of these at length.


"Searchers Approach"

William Easterly offers a nontraditional, and somewhat controversial "searching" approach to dealing with poverty, as opposed to the "planned" approach in his famous critique of the more traditional Owen/Sachs, The White Man's Burden. Traditional
poverty reduction Poverty reduction, poverty relief, or poverty alleviation, is a set of measures, both economic and humanitarian, that are intended to permanently lift people out of poverty. Measures, like those promoted by Henry George in his economics ...
, Easterly claims is based on the idea that we know what is best for impoverished countries. He claims that they know what is best. Having a top down "master plan," he claims, is inefficient. His alternative, called the "Searchers" approach, uses a bottom up strategy. That is, this approach starts by surveying the poor in the countries in question, and then tries to directly aid individuals, rather than governments. Local markets are a key incentive structure. The primary example is of mosquito nets in Malawi. In this example, an
NGO A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...
sells mosquito nets to rich Malawians, and uses the profits to subsidize cheap sales to the impoverished. Hospital nurses are used as middle-women, profiting a few cents on every net sold to a patient. This incentive structure has seen the usage of nets in Malawi spike over 40% in less than seven years. One of the central tenets in Easterly's approach is a more bottom up philosophy of aid. This applies not only to the identification of problems, but to the actual distribution of capital to the areas in need. In effect, Easterly would have countries go to the area which needed aid, collect information about the problem, find out what the population wanted, and then work from there. In keeping with this, funds would also be distributed from the bottom up, rather than being given to a specific government. Easterly also advocates working through currently existing Aid organizations, and letting them compete for funding. Utilizing pre-existing national organizations and local frameworks would not only help give target populations a voice in implementation and goal setting, but is more efficient economically. Easterly argues that the preexisting frameworks already "know" what the problems are, as opposed to outside
NGO A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...
s who tend to "guess". Easterly strongly discourages aid to government as a rule. He believes, for several reasons, that aid to small "bottom up" organizations and individual groups is a better philosophy than to large governments. Easterly states that for far too long, inefficient aid organizations have been funded, and that this is a problem. The current system of evaluation for most aid organizations is internal. Easterly claims that the process is biased because organizations have a large incentive to represent their progress in a positive light. What he proposes as an alternative is an independent auditing system for aid organizations. Before receiving funding, the organization would state their goals and how they expect to measure and achieve them. If they do not meet their goals, Easterly proposes we shift our funding to organizations who are successful. This would prompt organizations to either become efficient, or obsolete. Easterly believes that aid goals should be small. In his opinion, one of the main failings of aid lies in the fact that we create large, utopian lists of things we hope to accomplish, without the means to actually see them to fruition. Rather than establish a utopian vision for a particular country, Easterly insists that we shift our focus to the most basic needs and improvements. If we feed, clothe, vaccinate, build infrastructure, and support markets, the macroscopic results will follow. The "Searching Approach" is intrinsically tied to the market. Easterly claims that the only way for poverty to truly end is for the poor to be given the capability to lift themselves out of poverty, and then for it to happen. Philosophically, this sounds like the traditional "bootstrap" theory, but it is not. What he says is that the poor should be given the fiscal support to create their market, which would give them the ability to become self-reliant in the future. In the end of his book, Easterly proposes a voucher system for foreign aid. The poor would be distributed a certain number of vouchers, which would act as currency, redeemable to aid organizations for services, medicines, and the like. These vouchers would then be redeemed by the aid organizations for more funding. In this way, the aid organization would be forced to compete, if by proxy.


Proscriptive "Ladder Approach"

Sachs presents a near dichotomy to Easterly. Sachs presents a broad, proscriptive solution to poverty. In his book, The End of Poverty, he explains how throughout history, countries have ascended from poverty by following a relatively simple model. First, you promote agricultural development, then industrialize, embrace technology, and finally become modern. This is the standard "western" model of development that has been followed by countries such as China and Brazil. Sachs main idea is that there should be a broad analytical "checklist" of things a country must attain before it can reach the next step on the ladder to development. Western nations should donate a percentage of their GDP as determined by the UN, and pump money into helping impoverished countries climb the ladder. Sachs insists that if followed, his strategy would eliminate poverty by 2025. Sachs advocates using a top down methodology, utilizing broad ranging plans developed by external aid organizations like the UN and World Bank. To Sachs, these plans are essential to a coherent and timely eradication of poverty. He surmises that if donor and recipient countries follow the plan, they will be able to climb out of poverty. Part of Sachs' philosophy includes strengthening the International Monetary Fund, World Bank, and the United Nations. If those institutions are given the power to enact change, and freed from mitigating influences, then they will be much more effective. Sachs does not find fault in the international organizations themselves. Instead, he blames the member nations who compose them. The powerful nations of the world must make a commitment to end poverty, then stick to it. Sachs believes it is best to empower countries by utilizing their existing governments, rather than trying to circumnavigate them. He remarks that while the corruption argument is logically valid in that corruption harms the efficiency of aid, levels of corruption tend to be much higher on average for countries with low levels of GDP. He contends that this hurdle in government should not disqualify entire populations for much needed aid from the west. Sachs does not see the need for independent evaluators, and sees them as a detractor to proper progress. He argues that many facets of aid cannot be effectively quantified, and thus it is not fair to try to put empirical benchmarks on the effectiveness of aid. Sachs' view makes it a point to attack and attempt to disprove many of the ideas that the more "pessimistic" Easterly stands on. First, he points to economic freedom. One of the common threads of logic in aid is that countries need to develop economically in order to rise from poverty. On this, there is not a ton of debate. However, Sachs contends that Easterly, and many other neo-Liberal economists believe high levels of economic freedom in these emerging markets is almost a necessity to development. Sachs himself does not believe this. He cites the lack of correlation between the average degrees of Economic Freedom in countries and their yearly GDP growth, which in his data set is completely inconclusive. Also, Sachs contends that democratization is not an integral part of having efficient aid distribution. Rather than attach strings to our aid dollars, or only working with democracies or "good governments", Sachs believes we should consider the type of government in the needy country as a secondary concern. Sachs' entire approach stands on the assertion that abject poverty could be ended worldwide by 2025.


David Dollar

Dollar/Collier showed that current allocations of aid are allocated inefficiently. They came to the conclusion that aid money is given in many cases as an incentive to change policy, and for political reasons, which in many cases can be less efficient than the optimal condition. They agree that bad policy is detrimental to economic growth, which is a key component of poverty reduction, but have found that aid dollars do not significantly incentivize governments to change policy. In fact, they have negligible impact. As an alternative, Dollar proposes that aid be funneled more towards countries with "good" policy and less than optimal amounts of aid for their massive amounts of poverty. With respect to "optimal amounts" Dollar calculated the marginal productivity of each additional dollar of foreign aid for the countries sampled, and saw that some countries had very high rates of marginal productivity (each dollar went further), while others ith particularly high amounts of aid, and lower levels of povertyhad low nd sometimes negativelevels of
marginal productivity In economics and in particular neoclassical economics, the marginal product or marginal physical productivity of an input ( factor of production) is the change in output resulting from employing one more unit of a particular input (for instance, t ...
. In terms of economic efficiency, aid funding would be best allocated towards countries whose marginal productivities per dollar were highest, and away from those countries who had low to negative marginal productivities. The conclusion was that while an estimated 10 million people are lifted from poverty with current aid policies, that number could be increased to 19 million with efficient aid allocation.


"New Conditionality"

New Conditionality is the term used in a paper to describe somewhat of a compromise between Dollar and Hansen. Paul Mosely describes how policy is important, and that aid distribution is improper. However, unlike Dollar, "New Conditionality" claims that the most important factors in efficiency of aid are income distributions in the recipient country and corruption.


McGillivray

One of the problems in foreign aid allocation is the marginalization of the fragile state. The fragile state, with its high volatility, and risk of failure scares away donors. The people of those states feel harm and are marginalized as a result. Additionally, the fate of neighboring states is important, as economies of the directly adjacent states to those impoverished, volatile "fragile states" can be negatively impacted by as much as 1.6% of their GDP per year. This is no small figure. McGillivray advocates for the reduced volatility of aid flows, which can only be attained through analysis and coordination.


''Aid on the Edge of Chaos''

A persistent problem in foreign aid is what some have called a 'neo-Newtonian' paradigm for thinking and action. Development and humanitarian problems are frequently dealt with as if they are simple, linear, and best addressed through the application of 'best practices' developed in Western countries and then applied ad infinitum by aid agencies. This approach has come under sustained criticism in
Ben Ramalingam Ben Ramalingam (born April 1975) is a British researcher, strategist, innovator and author, currently Director of Strategy at British Red Cross, senior research associate at the Overseas Development Institute Politics and Governance programme a ...
's '' Aid on the Edge of Chaos''. This work advocates that aid agencies should embrace the ideas and principles of
complex adaptive system A complex adaptive system is a system that is '' complex'' in that it is a dynamic network of interactions, but the behavior of the ensemble may not be predictable according to the behavior of the components. It is '' adaptive'' in that the indiv ...
s research in order to improve how they think about and act on development problems.


Public attitudes

Academic research has suggested that members of the public overestimate how much their governments spend on aid. There is significant opposition to spending on aid but experiments have demonstrated that providing people with more information about correct levels of spending reduces this opposition.


See also

*
Aid agency An aid agency, also known as development charity, is an organization dedicated to distributing aid. Many professional aid organisations exist, both within government, between governments as multilateral donors and as private voluntary organizatio ...
*
Debt relief Debt relief or debt cancellation is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. From antiquity through the 19th century, it refers to domestic debts, in particu ...
*
Development aid Development aid is a type of foreign/international/overseas aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries. Closely-related concepts include: develop ...
* International Aid Transparency Initiative *
Transparency International Transparency International e.V. (TI) is a German registered association founded in 1993 by former employees of the World Bank. Based in Berlin, its nonprofit and non-governmental purpose is to take action to combat global corruption with civil ...
* White savior *
Effective altruism Effective altruism is a philosophical and social movement that advocates "using evidence and reason to figure out how to benefit others as much as possible, and taking action on that basis". People who pursue the goals of effective altruism, ca ...
Nations: *
Australian Agency for International Development Australian Aid is the brand name used to identify projects in developing countries supported by the Australian Government. As of 2014 the Department of Foreign Affairs and Trade (DFAT) has been responsible for Australia's official developmen ...
* China foreign aid *
Department for International Development , type = Department , logo = DfID.svg , logo_width = 180px , logo_caption = , picture = File:Admiralty Screen (411824276).jpg , picture_width = 180px , picture_caption = Department for International Development (London office) (far right ...
(United Kingdom) * International economic cooperation policy of Japan * Saudi foreign assistance *
Swedish International Development Cooperation Agency The Swedish International Development Cooperation Agency ( sv, Styrelsen för internationellt utvecklingssamarbete, ) is a government agency of the Swedish Ministry for Foreign Affairs. Sida is responsible for organization of the bulk of Swed ...
*
United States foreign aid United States foreign aid, also known as US foreign assistance consists of a variety of tangible and intangible forms of assistance the United States gives to other countries. Foreign aid is used to support US national security and commercial in ...


Notes


References


Citations


Sources

* * * * * A compilation of case studies of successful foreign assistance by the
Center for Global Development The Center for Global Development (CGD) is a nonprofit think tank based in Washington, D.C., and London that focuses on international development. History It was founded in November 2001 by former senior U.S. official Edward W. Scott, dire ...
. * – analysis of the proportion of aid wasted on consultants, tied aid, etc. * * *


Further reading

* * * * * * * * * * * *


External links


Foreign Relations and International Aid
resources from
University of Colorado–Boulder The University of Colorado Boulder (CU Boulder, CU, or Colorado) is a public research university in Boulder, Colorado. Founded in 1876, five months before Colorado became a state, it is the flagship university of the University of Colorado sy ...
*
AidData
– a web portal for information on development aid, including a database of aid activities financed by donors worldwide


OECD Development Co-operation Directorate (DAC)

Overseas Development Institute

Aid Reform Campaign
at Oxfam America
Does Foreign Aid Work? Efforts to Evaluate U.S. Foreign Assistance
Congressional Research Service The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a ...

Foreign Aid
at
Brookings Institution The Brookings Institution, often stylized as simply Brookings, is an American research group founded in 1916. Located on Think Tank Row in Washington, D.C., the organization conducts research and education in the social sciences, primarily in e ...

Center for Global Development's Modernizing U.S. Foreign Assistance Initiative

Aid Workers Network

www.realityofaid.org

Aid Harmonization: What Will It Take to Meet the Millennium Development Goals?

Aid
at GlobalIssues.org
Euforic
makes information on Europe's development cooperation more accessible
The Development Executive Group
Resource for staffing, tracking, winning, and implementing development projects.
European Network on Debt and Development reports, news and links on development aid.



Aid Guide
at OneWorld.net
NL-Aid

Advance Integral Development

Foreign Aid Projects 1955–2010
* International Aid a
Islamic Help
{{Authority control International relations