Why is ‘aid’ not the Why is ‘aid’ not the answer to world answer to world development?development?

Definition of ‘Aid’Definition of ‘Aid’

• Act or result of Act or result of helping; assistancehelping; assistance

• Aid is money, Aid is money, equipment, or equipment, or services provided services provided for people in needfor people in need

Food aid delivery by WFP to Food aid delivery by WFP to the people of Afghanistanthe people of Afghanistan

Foreign AidForeign Aid

• The U.S. government has provided over $321 The U.S. government has provided over $321 billion in assistance to Third World povertybillion in assistance to Third World poverty

• Politically popular since it will increase trade and Politically popular since it will increase trade and national securitynational security

• Economic and social failureEconomic and social failure

• Increasing government power, destroying Increasing government power, destroying economic encouragement, subsidizing misguided economic encouragement, subsidizing misguided policies, promoting unprofitable enterprises, policies, promoting unprofitable enterprises, foreign aid increases Third World poverty.foreign aid increases Third World poverty.

Human AssistanceHuman Assistance

• Aid designed to prevent Aid designed to prevent immediate disaster – mainly immediate disaster – mainly takes the form of food aid.takes the form of food aid.

• The United States has The United States has distributed over $34 billion distributed over $34 billion worth of food to the Third worth of food to the Third World and currently World and currently provides around $1.2 bullion provides around $1.2 bullion a year in food transfers.a year in food transfers.

• Food Aid has increased Food Aid has increased hunger abroad in the long hunger abroad in the long run.run.

Problem with ‘food aid’Problem with ‘food aid’

• Food aid is a free source of food for the people but this Food aid is a free source of food for the people but this means the country will decrease the prices for local means the country will decrease the prices for local farmers, therefore resulting in less domestic farmers, therefore resulting in less domestic production.production.

• Food aid also discourage food production since the Food aid also discourage food production since the country will be too dependent creating a never ending country will be too dependent creating a never ending crisis that requires more aid to avoid famine.crisis that requires more aid to avoid famine.

• Example: Due to the poverty in India the Americans Example: Due to the poverty in India the Americans have provided food aid (wheat) for India, but the result have provided food aid (wheat) for India, but the result have caused thousands of Indian farmers to be have caused thousands of Indian farmers to be bankrupted causing millions of Indians to die due to bankrupted causing millions of Indians to die due to starvation.starvation.

Development AidDevelopment Aid

• Development aid tries to promote long-run Development aid tries to promote long-run growth by building large projects, giving money growth by building large projects, giving money and balance of payments help, and funding a and balance of payments help, and funding a variety of research and planning efforts.variety of research and planning efforts.

• Since 1946 the United States has given over $131 Since 1946 the United States has given over $131 bullion in development assistance.bullion in development assistance.

• Third World countries do not grow because they Third World countries do not grow because they lack financial resources but also depends on lack financial resources but also depends on personal, cultural, social and political factors.personal, cultural, social and political factors.

ConclusionConclusion

• Foreign aid fails as a Foreign aid fails as a development because it development because it destroys the encouragement destroys the encouragement of the marketplace. Because of the marketplace. Because it leads the Third World away it leads the Third World away from the free market, it from the free market, it actually increases Third actually increases Third World poverty.World poverty.

• It is therefore vital to find It is therefore vital to find another way to development another way to development of the Third World country. of the Third World country. (Fair Trade)(Fair Trade)