The Daily Demarche
Wednesday, February 02, 2005
Foreign Aid - Crack for the Developing World's Politicians?
A while ago, Dr.Demarche blogged here, here, and here about foreign aid. Each of those pieces is, as one might expect from the good Doctor, a worthy read. I encourage all of our readers to spend some time reading them, if they have not already done so. I've long wanted to put my own thoughts on the subject down, but have been caught up in other things for a while.

So, lucky readers, tonight's the night! Rather than further join in the Iraq election frenzy, about which I have already posted here, I thought I would go back to this old reliable topic.

Let me first say that I do believe in foreign aid as a principle. There are circumstances in which foreign aid can be effective. The response of many nations to the recent tsunami is a good example of this. In Afghanistan and Iraq government and civil institutions need to be built from the ground up. Distribution of the most basic needs, such as food and clothing, are worthy aid projects.

Beyond that, however, the best aid projects are (in my opinion) those that generate self-sustaining improvement or development, rather than a continued need for a donor's largesse. Bootstraps rather than boots, that sort of thing. During the Cold War, much of our aid efforts were designed, primarily, to advertise the fact that we gave aid: the bridge built by USAID had a sign right next to it advertising the fact. If the bridge broke in a few years, so much the better: we could build a new one, with a bigger sign.

To its credit, USAID began to realize, some time after the expiration of the Soviet threat, that this kind of aid was not actually that effective at alleviating poverty or fostering development. From what I've seen (although I should caveat that my experience with USAID and other forms of foreign assistance is by no means fully comprehensive) many in the aid bureaucracy genuinely want to do good. So USAID seems to have moved away from large infrastructure development projects towards projects that are designed to have long-term effects on a country's economy and/or civil society.

Whether this is effective is another issue. I personally wonder if our efforts aren't better spent by getting governments to reduce barriers to trade, make it easy for entrepreneurs to open businesses, and encourage private investment. Anyway.

Unfortunately, many leaders in the developing world prefer the big, showy kind of aid over the one that has a chance at working. Let me illustrate with an example culled from my personal experience.

My boss and I had a meeting with the prime minister and his private secretary in the country of "Fredonia." My experience in the developing world has been that leaders are all too happy to publicly castigate the United States for all the country's problems while happily pressing us for more money, assistance, whatever. On this day, our meeting followed suit.

When we met the PM and his PS (acronyms rule!), the first order of business, after the exchange of pleasantries, was for our hosts to decry the lack of aid the US gave them - a familiar refrain. Undaunted, we pointed out that the amount of money the US gave to this particular country and the region made it one of our highest recipients of aid on a per capita basis. Yes, they said, but the problem was with the kind of aid we gave. You see, our hosts continued, no one could tell we were giving aid, and the PM was getting ransacked by the opposition for not getting more aid from the US.

Afterwards, talking to my boss, it hit me. They wanted aid not for the development of their country, but for the political gain they could get from telling everyone that they got something tangible from the US government. Basically, foreign aid was kind of like crack for them: they wanted it bad, they had to have it, and once they got it, they needed more, more, more.

I can't really say anything bad about the PM as a person, he was a nice man (the PS is actually a very competent civil servant as well), and Fredonia remains a democracy, but it, and other countries like it, will remain a developing country until they get off the crack.

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dé·marche 1) A course of action; a maneuver. 2) A diplomatic representation or protest 3) A statement or protest addressed by citizens to public authorities.

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