End poverty by cutting foreign aid

Effective and working governments are necessary for prosperity. However, foreign aid is getting in the way of government progress, says Princeton University’s Angus Deaton. The author of the new book The Great Escape: Health, Wealth, and the Origins of Inequality argues his case in Project Syndicate.

Unfortunately, the world’s rich countries currently are making things worse. Foreign aid – transfers from rich countries to poor countries – has much to its credit, particularly in terms of health care, with many people alive today who would otherwise be dead. But foreign aid also undermines the development of local state capacity.

This is most obvious in countries – mostly in Africa – where the government receives aid directly and aid flows are large relative to fiscal expenditure (often more than half the total). Such governments need no contract with their citizens, no parliament, and no tax-collection system. If they are accountable to anyone, it is to the donors; but even this fails in practice, because the donors, under pressure from their own citizens (who rightly want to help the poor), need to disburse money just as much as poor-country governments need to receive it, if not more so.

It comes out the same week that the UN will deliberate how to proceed after the Millennium Development Goals expire in 2015. Advocates like the ONE Campaign and Jeff Sachs are making the case for more aid, not less. The book should revive the academic debate over whether foreign aid causes more harm than good.


About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.

  • Irene Danysh

    I could not agree more with Deaton’s claim that foreign aid is in many cases prolonging and deepening poverty. It is even true in the healthcare field. I have worked for 2 years in DR Congo managing a health project funded by the European Union, and though I gave it all my heart and soul of effort, and spent much time in the villages with the people, I saw that the project could not help but create corruption at the local level, dependency at the local, regional and national level, and when these projects eventually end, as they must, the people are now used to good drugs at a subsidized or free level (which they can no longer get), but also health care providers who lived well during the projects and will now prey on the population to continue getting some profits. In countries where there is aid saturation, i.e. huge numbers of NGOs and large part of the national budget footed by donors, the governments abdicate responsibility to the citizens, which is even a logical thing to do. Progress will not be occurring as long as we are artificially propping up countries. Once citizens in the north start realizing that aid is hurting people, that it is leading to a patronizing, new type of colonialisation, they might start to think twice, and start advocating for justice instead: level economic
    playing fields, ethical business practices and strengthening of human rights.

  • I am also concerned about another aspect of philanthropic aid: it certainly makes the donors feel good and while it does help it also distracts from political solutions needed to deal with problems at home (in our case the US). While may dignitaries pontify about how charity is doing such wonderful things, more elderly people are growing hungry in our own backyard (and of course children) but who cares among the very patient optimists?