Fallacies about aid and development

Generally, blogs are a pretty good way to hear from people with direct experience and expertise on important issues, without their views being intermediated by the traditional media. Blogs often provide analysis which is well-informed and evidence-based, and both deeper and broader than can be found in the mainstream media. But sadly, these qualities are not much in evidence in much of the commentary and writing on the web about the case for or against increasing development assistance.

There is a view that aid is ineffective, and often simply props up corrupt dictatorships. Some commentators argue that it should not be channeled through governments, but rather to NGOs or the commercial private sector. And some people argue that we are already generous enough, or have no responsibilities towards the poverty of others. A small number of blog authors contribute to this scepticism, by continually raising doubts about the effectiveness of aid. Writers such as Alex Singleton (who seems to have declared himself an Institute) and Tim Worstall do not seem to be indifferent to the plight of the poor, but they do have strong views about aid that do not seem to me to be consistent with the evidence. Jim, over at Our Word is Our Weapon, does an excellent job in providing detailed rebuttals to many of the points that they make.

In this post*, I draw together a list of the most egregious fallacies, and provide brief explanations of why I think they are wrong. I do not say that any individual has argued all of these points, but these are all arguments that I have seen made and which seem to contribute to an overall negative impression about aid.

Fallacy 1. We have to choose between more aid or more trade.
Allowing producers in poor countries to sell to customers in affluent markets would be of huge benefit – at least as much as doubling global aid. But many countries could not take advantage of those opportunities without complementary investment – for example, in transport infrastructure, skills or telecommunications. If we do open our markets up – as we should – this is a reason to spend more, not less, on aid, at least for the coming years. Bill Clinton’s measure (AGOA) to open US markets a little to the poorest countries has been relatively successful in part because it was accompanied by technical assistance and other aid-financed measures to help poor countries like Lesotho to make the most of the opportunities it offered. And when we introduce liberalising measures in rich countries – such as closing Rich countries are made better off, not poorer, by liberalising our markets. We should not see that as something to do instead of giving more aid: we should do it as well, for our benefit as well as the benefit of the poor.

Fallacy 2. Poor countries would be the main beneficiaries of free trade
The main beneficiaries of trade liberalisation would be middle income countries like Brazil, India and China. The very poor countries already have preferential access to many – though not all – rich country markets; and so they might well lose out from blanket competition. This is absolutely NOT a reason to delay trade liberalisation, but it is a reason to be cautious about how much it will benefit the very poor, at least in the short run.

Fallacy 3. Aid to governments is just wasted – it goes into the pockets of corrupt dictators
During the cold war, donors used to spend a lot of money propping up lousy governments like Mobuto in Zaire; but since the 1990s they have made spectacular efforts to get aid to countries that can use the money best. There is a lot of evidence that shows that aid is being better spent now, and producing very good results – in fact, the rate of return on aid is better than almost any other government spending programme.

Fallacy 4. Aid is better given to private charities and NGOs than to governments, which are part of the problem
Some NGOs do a very good job; but they mainly tackle the symptoms, rather than the underlying causes of poverty. Often they cannot operate on the scale needed, or in the right policy arena, to tackle the institutional weaknesses that contribute to poverty. Furthermore, the endless proliferation of NGO projects adds to the burden on the hard-pressed policy makers, public servants and others in developing countries who are doing their best with limited resources to get the job done; and by providing money through channels outside government, they weaken or remove all semblance of accountability to the local population for the delivery of services. It is true that weak government institutions are a significant part of the problem in many African countries. But if weak institutions are a cause, it follows that finding ways to improve those institutions is likely to make a significant contribution to the solution. Ignoring and bypassing them weakens them further, and delays the day when countries will have effective and accountable governments.

Fallacy 5. Extra aid in Africa could not be absorbed: it would just be wasted.
Aid to Africa per person halved in the 1990s. There is no reason to believe that if twice as much aid could be fairly well spent then – and the evidence is that, on average, it was – that it couldn’t be well spent again now. If donors made a serious effort to make it easier for recipient countries to use aid productively, much more could be used to benefit the world’s poor.

Fallacy 6. We’ve already pumped billions of dollars into Africa and it we have nothing to show for it. So we know it doesn’t work. Jeffrey Sachs tells a story about a village fighting a forest fire. They send their fire engine, which tries valiantly to douse the flames. But the fire continues to burn. Should the village conclude that fire fighting is ineffective, or should they conclude that they need more fire engines? There is no question that some aid money has been wasted – especially the politically motivated aid to badly governed countries – but that only makes it even more remarkable that on average aid is so effective. The aid that is well spent must be making a huge difference, given that it more than offsets the mistakes.

Fallacy 7. The problems that developing countries have had using aid well are mainly of their own making.
The main reasons why aid is not effective as it could be are not because the recipients waste it, but because the donors deliver it so badly. By attaching all kinds of strings and conditionality, donors make it very hard for recipients to get the best possible value for money (one aid project, for example, required bricks to be shipped all the way from Japan to build schools in Uganda, where there are perfectly good locally made bricks, increasing the cost of new schools seven-fold.). Donors refuse to make aid predictable, so it cannot be invested over a number of years and has to be spent as soon as it is available. Donors impose a battery of evaluations, appraisals, systems and other costs on the recipient Government. If donors were to think strategically about their long term interests in reducing poverty, rather than short term commercial and political gain, the aid they give could be much more effective and much more could be given and be effectively used.

Fallacy 8. Aid will solve all the problems of the poor.
More and better aid is not enough. Rich countries must reform the trading system, tackle corruption at the source (it is companies and governments from rich countries who pay the bribes that we hear so much about), open their borders to greater migration, reduce climate change, control arms exports, increase the transparency of resources into extractive industries such as diamonds and oil which pay for civil wars, ensure access to essential technologies such as medicine, and ensure that poor people have a greater voice in the international system.

Fallacy 9. America is a generous aid donor
America gives one of the lowest shares of its income of any industrialised country. The total may be big, because it has a large economy, but this just tells us that it can afford to give more. And even including private donations, the US is one of the least generous countries on earth.

Fallacy 10. Africa is all the same: corrupt, hopeless, incompetent.
Africa is a vast continent, with huge diversity. Any generalisation about Africa as a whole is almost certainly wrong about much of the continent. There are some countries that are not well governed, just as there are in Europe and the Americas; and there are many countries that are democratic and well-led, and which are experiencing economic growth. (There are also democratic countries that are not growing, and undemocratic countries that are growing.) To characterise all of Africa based on outliers like Mugabe would be like generalising about Europe based on Berlusconi.

Fallacy 11. It isn’t our fault
Quite a lot of it is our fault. We contributed to the causes, though slavery, colonialism, the cold war, and continuing economic exploitation. We have invented or propped up some of the continent’s worst dictators. Where it suited us to do so, we invented and encouraged hatred (for example, between Hutus and Tutsis – a distinction invented by Belgian colonialists). We continue to impoverish the continent by demanding free markets for the commodities we want to buy, but providing no access to our own markets to enable countries to make and sell products on which they can earn a more stable income with greater value added. We will buy their cocoa beans, but we won’t let them sell us chocolate. Where countries might have a chance of succeeding in world markets – such as beef exports from Namibia or tobacco from Malawi – we subsidise our own exports while forbidding poor countries to do the same, so that they cannot compete for lucrative markets such as in the Middle East. We sell the leaders guns and weapons and we bribe public and private officials. Our consumption of carbon fuels leads to desertification and drought, putting millions at risk from hunger, and yet we expect Angola and Nigeria to guarantee cheap, affordable oil. And then we dump our unwanted food – surplus production by over-subsidised farmers in the US, Canada and Europe – and we pretend we are feeding the hungry, when all we are doing is driving local farmers out of business (we even have the chutzpah to count this economic vandalism as aid).

Fallacy 12. It isn’t our problem
This is our problem. It is the greatest moral issue of our age. 20,000 people die every day of extreme poverty, in part because we choose not to provide the modest amount level of resources that would keep them alive. Many of us wonder what we would have done to oppose slavery or to resist the Nazis; and yet we do very little about the avoidable death of millions of people a year, and the suffering of millions more. But aside from the moral imperative to do something, it is not in our interests to ignore the problem. Extreme poverty and global inequality increases pressure on immigration and asylum, increases the risk of infectious disease, and puts our communities at risk from drugs, organised crime, and even acts of terrorism. Our collective interest in a more integrated, global, free-trading economy is put at risk if we do not make serious efforts to ensure that the benefits are shared with the world’s poor and not simply enjoyed by the rich.

Fallacy 13. The public doesn’t want to spend money on aid and doesn’t believe it works
Despite the malign efforts of a small cabal of bloggers who peddle ignorant views which verge on the racist, the British public is more generous and more willing to spend money on aid than many politicians think. According to a poll reported by Jim at Our Word is Our Weapon, 85% of people overestimated the proportion of national income we actually spend on aid, and when the true amount (0.34% at the time) was revealed, twice as many thought it was too little as thought it was too much. In another poll, a majority (52% of the total, 57% of those who expressed an opinion) agreed with a statement put to them that "Africans can solve their problems but only if they receive financial and other assistance from rich countries". A huge majority agreed that it was the responsibility of "a partnership between African and rich countries" to solve African problems, and that almost twice as many supported the statement that "most or all" of Africa’s large debts should be cancelled.

Conclusion

I feel particularly passionate about this because (a) there is a lot of empirical evidence supporting the overall benefits of aid and (b) this is, quite literally, a matter of life or death for the recipients. While I support the right of anyone to hold any views they want, and to express them as they see fit, I also believe that we all have a responsibility to ensure that our views are well informed and grounded in facts, particularly when so much is at stake.

* This is an amended version of an earlier post, which I wrote while particularly angry about a series of particularly ill-informed comments. I realise that the personal way in which I expressed my concerns detracted from the substance of the points I wanted to make. I apologise to anyone that I offended.

7 thoughts on “Fallacies about aid and development”

  1. Pingback: Tim Worstall

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  3. Anybody reading this post who is broad minded enough to consider the possibility that there may be a counter-argument (or indeed that Tim is being set up as a straw man) should read his detailed reply to this over on his blog

  4. > Donors refuse to make aid predictable, so it cannot be invested over a number of years and has to be spent as soon as it is available.

    Unlike, say, loans. Loans are stable and predictable and perfect for investment. Businesses and governments use them all the time, with great effectiveness. Would you like to see more loans given to the Third World, Owen?

    Owen says:
    a. Loans from the World Bank etc are not long term and predictable.

    b. Many of the investments do not yield fiscal returns, or do so only in the very long run (think of public investment in education, for example) and so do not provoide a stream of revenues with which loans can be repaid.

    c. If rich countries invest now in developing countried with grants, we will be handsomely repaid, for example through the benefits of more trade.

    So I am not in favour of adding to the debt burden of developing countries. And I am in favour of increasing the productivity of the aid we give by making it more predictable and so enabling it to be better spent.

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  6. I am impressed by the diversity of comments in this topic.Some being outright ignorant,others well informed and some bordering to ignorant and arrogant.Development /underdevelopment of Africa cannot be explained by simplistic sweeping statements.As some comments have clearly outlined,its a factor of several contributors.Europe and the imperialists underdeveloped Africa through exploitation of resources for decades and distabilization of the social and economic order that had existed for centuries.After a century of control,these countries emerged from colonialism with a confused hybrid of traditional and western ideals.The education provided by the colonizers was selective,subjective and meant to convert the Africans to puppets/Subjects of their former colonizers and to further their interests through serving them.The monetary economy introduced was confusing and created poverty as Africans were turned into labourers in the imperialists farms and industries.It was inadequate to manage and sustain the systems introduced by the imperialists and especially to manage modern Economies.Not to belabour the point much,let me just state afew facts from an African point of view.Aid alone in Africa might not alleviate poverty and suffering.It needs to be combined with appropriate education and training to ensure its relevance.Except for humanitarian Aid,the rest should be channelled towards building longterm institutions that are appropriate for the African settings.Its not a question of whether to channel it through government or through NGOs but also a question of what is functioning at that particular place and time.Thorough research must be undertaken to establish what people view as development from an African point of view as Africa is as diverse as its people from one country to the other.Generalizations are almost a crime.Some countries are so advanced in education/infrastructure,Health/Governance etc etc.Some are still living in the bushes of Kalahari desert(bushmen).All Africans are not incompetent,hopeless and ignorant.Some are well incorporated to the world economy and are living good lifestyles in urban cities.Others are still traditionalist,ignorant,illiterate and absolutely poor.A chain is as strong as its weakest point.The world has every obligation to uplift the poorest from absolute poverty and suffering.This could be in transfer of technology,Foreign direct investments,opening of markets,Increased aid and also demand for better governance and accountability for donor aid.More say for the locals in their developoment projects is also important so as to discover what Africans value as development and not what the donors think is development.

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