Wednesday, April 22, 2015

Does aid work?

Does Aid Work?
Introduction

The debates and controversies about aid effectiveness and international development have become important issues for decades (Radelet 2006). For those who are sceptical of aid, there are number of fundamental arguments and criticisms of aid offered, but it is also important to note that most of the arguments are not opposed all forms of aid and the criticism is mostly directed to governments and international organisations (Regan 2012). In contrast, the defenders of aid argue that aid has been successfully contributed in creating growth, skills development of the people in poor countries, improving quality of services and infrastructure, and fulfilling basic rights such as education and health (Riddel 2008 and Regan 2012).

In my opinion, the debates which triggered by question “does aid work?” cannot be answered by single answer like “yes” or “no”. The failure of some aid in some development programs or countries cannot be generalized as failure of all forms of aid; moreover, the successful of aid in some specific goals or countries cannot be justified as successful of all forms of aid. Aid alone cannot be blame as a successful or failure factor of development (Riddel 2014: 12). External factors such as: good governance, law enforcement, leadership, security and human resources also become important factors on the successful or failure of aid.

This article explores several key arguments both from experts who are sceptical on aid and from supporters of aid in development. This article also criticizes arguments from both sides, makes appropriate comparison, and gives conclusion to answer the question “does aid work” and what are the biggest difficulties in responding to this question.


“Aid doesn’t work” arguments

USAID Project in Africa
Aid and development practices in Sub-Saharan Africa have become an important example for those who are sceptical of a value of aid. Moyo (2009) argues that the most aid-dependant countries in Africa have not benefitted by the aid and international development practice provided. Despite receiving more than $ 1 trillion from the west for development assistance, it has not made Africa better off. Moreover, when aid was at its peak in Africa between 1970 -1998, the poverty rate in Africa rose significantly from 11% to 66%. Moyo also states that foreign aid for Africa simply doesn’t work, made everything worse and must be stopped (Edemariam 2009 and Wittenberg 2009).

One of the greatest development economists, Peter Bauer, is known as his persistent critics of foreign aid (Shleifer 2009: 379). He defined aid as “a phenomenon whereby poor people in rich countries are taxed to support the lifestyles of rich people in poor countries” (MacIver 2004: 166). This definition of aid was enough to be the main reason for him to oppose foreign aid (Shleifer 2009: 380).

In addition, Easterly (2006) argues that there are three legends on aid which followed by aid supporters but unfortunately they are definitely not true: Firstly, the statement that the poorest countries are dependent with aid-financed big push and they cannot emerge without it, secondly, poor growth of poor countries is because of poverty trap (they are poor only because their parents were poor) and not because of bad government, thirdly, foreign aid give a big push to poor countries to achieve their own sustainable growth. Statistical data on aid and growth in Africa from 1970 to 1999 shows that the big push theory was wrong because the significant increase of aid followed by the significant decrease of growth (Easterly 2006: 31). Moreover, Easterly (2006: 245) also explores that foreign aid cannot achieve the end of poverty and only in-country development growth in free markets mechanism can achieve that. 


“Aid does work” arguments

In contrast, Sachs (2012) bluntly writes that the critics of foreign aid are wrong, aid works and it saves lives. He also contends that poverty can be ended by the year 2025 by the influence of international development, by the influence of the rich to help the poor across the borders (Sachs 2005). The task to end poverty can be achieved within the commitment of rich countries to spend their 0.7% of the Gross National Product (GNP) or only 7 cents out of every $10 income for helping poorest countries in the world (Sachs 2005: 287). If Easterly (2006) believes that poverty trap is only a legend, Sachs (2005: 289) trusts that poverty trap is the real problem of poverty and success in ending the poverty trap is easier than it appears because several reason such as: the number of extreme poverty have decreased significantly into small proportion of total population, give more responsibility to the richest of the rich, and availability of powerful tools such as mobile phones and internet which make logistics system become easier.

According to Gates (2012), foreign aid is the best way to address world’s development problem. The anti-foreign aid supporters use wrong conclusion to support their contention that aid doesn’t work and should be stopped across the world. There is also argument that the failure of aid will still happen even when aid goes to intended recipients. This claim is contradictory with the fact that in the past 50 years, the children who die every year has declined from 20 million to about 8 million and the extreme poverty has fallen by more than 50% (Gates 2012).


The debate doesn’t work

The polarizing debates on the effectiveness of aid and the question like “does aid work?” will become never ending debate because each supporter has their own perspective. The anti-foreign aid supporters emphasized their arguments with bunches of examples of failure of aid in Africa without seeing its positive impacts to the rest of the world such countries in Asia Pacific. On the other hand, the foreign aid supporters emphasized their contention by always giving examples on health issues and decreasing number of poverty.

After analysing the debates, Murphy (2014) concludes that the current aid debate doesn’t work and is damaging and the question “does aid work?” is unhelpful. The debate can be fixed by changing the questions to analyse the specific conditions of successful foreign aid, how to increase effectiveness of aid, and what kinds of aid should be stopped and what kinds should be continued or replicated (Murphy 2014).    

Conclusion

Finally, there is no single answer to the question “does aid work?”, because in fact sometimes it works but sometimes it doesn’t. The question also impossible to be answered by “yes” or “no” because in the real development practice – for example in Indonesia – it can be seen that for some cases, foreign aid does really work (for example: post-tsunami recovery in Aceh) but in some cases it failed to achieve the goal (for example: the significant increase of HIV/AIDS cases in Papua).

There are inevitably a lot of examples explaining the failure and the successful of aid. Again, the failure of some aid programs cannot be generalized as failure of all forms of aid; moreover, the successful of some aid programs also cannot be justified as successful of all forms of aid. Considering external of aid is also important in order to draw conclusion because aid is not standing alone in the development. ***

By: Agung Wasono (March 2015)


References:

Easterly, W. (2006) The White Man’s Burden. New York: The Penguin Press.
________ (2010) How Not to Win Hearts and Minds, The Wall Street Journal. 16 August 2010, available at: http://www.wsj.com/articles/SB10001424052748703999304575399422302747074 (assessed 28 March 2015)
Edemariam, A. (2009) Everybody know it doesn’t work, The Guardian. 19 February 2009, available at: http://www.theguardian.com/society/2009/feb/19/dambisa-moyo-dead-aid-africa (assessed 27 March 2015)
Gates, B. (2012) The Truth About Foreign Aid, The International Herald Tribune. 27 January 2012, available at: http://www.nytimes.com/2012/01/27/opinion/the-truth-about-foreign-aid.html?_r=0 (assessed 16 March 2015)

MacIver, D. (ed) (2004) Political Issues in the World Today, Manchester: Manchester University Press

Moyo, D. (2009) Dead Aid: Why Aid is not Working and How There is a Better Way for Africa, New York: Farrar, Straus and Giroux

Murphy, T. (2012) The Aid Debate Doesn’t Work but it Can be Fixed. Humanosphere. 27 January 2014, available at: http://www.humanosphere.org/basics/2014/01/aid-debate-doesnt-work-can-fixed/ (assessed 29 March 2015)

Radalet, S. (2006) A Primer on Foreign Aid, Center for Global Development, Working Paper Number 92, available at: http://www.cgdev.org/files/8846_file_WP92.pdf (assessed 28 March 2015)

Regan, C (ed). (2012) 80:20 in an Unequal Development World. 6th edition. Ireland: Co Wicklow. 

Riddel, R, C. (2014) Does Foreign Aid Really Work? An Updated Assessment, Development Policy Centre Crawford School of Public Policy ANU, available at: http://devpolicy.org/reports/DP-33-Does-foreign-aid%20really-work-an-updated-assessment.pdf (assessed 25 March 2015)

Sachs, J, D.  (2012) Aid Works, Project Syndicate, 30 May 2012, available at: http://www.project-syndicate.org/commentary/aid-works (assessed 25 March 2015)
­­­________  (2005) The End of Poverty: Economic Possibilities of Our Time, New York: The Penguin Press

Shleifer, A. (2009) Peter Bauer and the Failure of Foreign Aid, Cato Journal, Vol. 29(3): 379 – 390, available at: http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2010/11/cj29n3-1.pdf (assessed 24 March 2015)

Wittenberg, D. (2009) Stop Giving Aid to Africa, It’s Just Not Working. nrc.nl. 6 March 2009, available at: http://www.theguardian.com/society/2009/feb/19/dambisa-moyo-dead-aid-africa (assessed 28 March 2015)