Date Written: 3/7/2023
Question: What have been the effects of foreign aid programs, such that virtually everyone was describing them as failures by the 1990s?
Foreign aid sounds like a great idea right? What a noble gesture it is to help the poor abroad. However foreign aid programs aren’t what they appear to be. They actually have the opposite effect of what they are supposed to do. They only hurt the poor of other countries.
When governments give out foreign aid they don’t directly give food, clothes, or money to the poor of other countries. They give those resources to the governments of those poor countries. In turn, those governments can do whatever they want with the resources. Contrary to popular belief, governments are not that benevolent and they are incentivized to keep this foreign aid for themselves. So in reality, foreign aid is actually government-to-government subsidies with a nice name so people turn a blind eye to it’s effects.
The economist Peter Bauer writes, “To call official wealth transfers “aid” promotes an unquestioning attitude. It disarms criticism, obscures realities, and prejudges results. Who can be against aid to the less fortunate? The term has enabled aid supporters to claim a monopoly of compassion and to dismiss critics as lacking in understanding and compassion.”(1)
So what do the governments of poor countries do with the foreign aid money? They pocket most of it and use it to keep themselves in power of course. The countries that are poor are almost exclusively socialist dictatorships. (They wouldn’t be poor if they abandoned socialism and embraced the free-market.) These types of governments rely on foreign aid to survive as they pursue destructive economic policies. So it would be impossible for them to tax (steal) enough money from their country’s citizens to support their repressive regimes. So they rely on the money they get from foreign aid to keep going.
A great example of a government abusing foreign aid is what happened in Zimbabwe. Here the previous dictator, Robert Mugabe, used food, that was gifted to his country as foreign aid, as a political weapon. He rewarded his allies with it and snuffed out his enemies at the same time. The International Crisis Group stated last October, the Zimbabwe regime was “blatantly using food as a political weapon against opposition supporters.”(2)
Additionally, one of the requirements to receive foreign aid is that the receiving country is impoverished. So this gives the governments of the poor socialist countries another perverse incentive to keep their country’s impoverished. If they wanted to raise the standard of living they would have to release most of their controls on the country, consequently losing most of their political power. Plus they would lose all their foreign aid money.
Under normal circumstances, the socialist dictators would suffer the negative consequences associated with their terrible and oppressive economic policy. They wouldn’t be able to fund their government as the citizens wouldn’t have enough money for them to take. But with foreign aid they are getting all the money they need to keep their regime going. So the citizens of those countries stay impoverished as the governments aren’t forced to give up their destructive economic policy. Foreign aid isn’t what it seems, all it does is bail out socialist dictatorships that are ruining the countries they govern.
- (1) Bauer, Peter. 2000. From Subsistence to Exchange and other Essays. Princeton, NJ.: Princeton University Press. pp. 42
- (2) Quoted in “Zimbabwe denies seizing food aid.” Business Day (South Africa), October 21, 2002.
Very nicely written and great use of a quotation. Very eye-opening for sure.
It’s crazy to think someone in power would do this to there people.