There has always been a debate about whether Official Development Aid is good or not so good. Does it alleviate suffering or does it create a culture of dependency?
Former World Bank economist William Easterly argues that most foreign aid is a misguided attempt to help. Easterly is the author of the 2006 book The White Man’s Burden, in which he says that most development aid has been a failure.
“The West spent $2.3 trillion in foreign aid over the last five decades and still [has] not managed to get twelve-cent medicines to children to prevent half of all malaria deaths.” He adds that aid has not been able to get bed nets to all the poor. (These nets are impregnated with insecticide that keep malaria-carrying mosquitoes from infecting people.)
Mr. Easterly says that big plans directed from the top down by people who think they know what’s best usually fail to alleviate poverty. What work better, he argues, are small-scale, bottom-up programs, built around the needs of the people they are meant to help by listening to what they have to say.
Doug Saunders in The Globe and Mail (March 29, 2008), commenting on Mr. Easterly’s book writes that, “When tides of foreign money wash into a poor country…it drives up the currency, swamps the productive economy and can leave the whole country poorer.
“On this basis Mr. Easterly argued for an end to virtually all foreign aid.”
Jeffrey Sachs takes the completely opposite point of view. He’s the man in charge of pushing the UN’s Millennium Development Goals, and he’s optimistic. “Extreme poverty can be ended, not in the time of our grandchildren, but our time,” he writes in his 2005 book The End of Poverty.
Writing in the British newspaper The Guardian (April 5, 2005) Mr. Sachs says: “The ways out of the poverty trap can be found. The financial costs of the needed development aid are utterly manageable, just 70 cents out of every $100 (0.7%) of the national incomes of the donor nations.” Only Sweden, Norway, Netherlands, Luxembourg, and Denmark have reached and exceeded the 0.7% goal. Canada sits at 0.32%.
He is particularly harsh in his criticism of the United States, which gives 0.15% of its Gross Domestic Product to development aid while spending five percent on its military. He asks: Is a superpower that devotes 30 times more in spending to the military than to development aid a reliable partner in the fight against extreme poverty?
Meanwhile, economist and development expert Paul Collier sees trade as the escape route from poverty. In his 2007 book, The Bottom Billion, Collier says a “bold new plan” is needed that must have the support of the world’s rich, industrialized nations. The plan would be to set up preferential trade policies to help the poorest of the poor sell to the wealthy nations.
The world’s trading system has been rigged in favour of the big nations for decades. For example, the European Union, America, and other rich countries pour tens of billions of dollars into subsidizing agriculture (According to the Farm Subsidy Database, the United States alone subsidized agriculture to the tune of $177.6 billion between 1995 and 2006.) This squeezes out developing world farmers who can’t possibly compete with the artificially low prices of food in wealthy nations.
And, the world’s richest person also sees business as a way out of the poverty trap. In 2008, the head of Microsoft gave a speech to the World Economic Forum in Davos, Switzerland in which he talked about what he calls “creative capitalism.”
Clearly, when the world’s poorest people can’t afford to buy any products there is no way companies can make a profit. Gates suggests another incentive is needed – recognition.
He said, “Recognition enhances a company’s reputation and appeals to customers; above all, it attracts good people to an organization. As such, recognition triggers a market-based reward for good behaviour.
He cites his own company’s donations of $3 billion in software and cash as an example. And, he says Microsoft is developing an interface that will allow illiterate people to use a computer. He gives another example of the Serum Institute in India, which found a new way to make a meningitis vaccine for 40 cents a dose.
The Argument that Foreign Aid Does more Harm than Good
Former World Bank economist William Easterly argues that most foreign aid is a misguided attempt to help. Easterly is the author of the 2006 book The White Man’s Burden, in which he says that most development aid has been a failure.
“The West spent $2.3 trillion in foreign aid over the last five decades and still [has] not managed to get twelve-cent medicines to children to prevent half of all malaria deaths.” He adds that aid has not been able to get bed nets to all the poor. (These nets are impregnated with insecticide that keep malaria-carrying mosquitoes from infecting people.)
Top Down Aid Programs don’t Work Well
Mr. Easterly says that big plans directed from the top down by people who think they know what’s best usually fail to alleviate poverty. What work better, he argues, are small-scale, bottom-up programs, built around the needs of the people they are meant to help by listening to what they have to say.
Doug Saunders in The Globe and Mail (March 29, 2008), commenting on Mr. Easterly’s book writes that, “When tides of foreign money wash into a poor country…it drives up the currency, swamps the productive economy and can leave the whole country poorer.
“On this basis Mr. Easterly argued for an end to virtually all foreign aid.”
The Argument in Favour of Development Aid
Jeffrey Sachs takes the completely opposite point of view. He’s the man in charge of pushing the UN’s Millennium Development Goals, and he’s optimistic. “Extreme poverty can be ended, not in the time of our grandchildren, but our time,” he writes in his 2005 book The End of Poverty.
Writing in the British newspaper The Guardian (April 5, 2005) Mr. Sachs says: “The ways out of the poverty trap can be found. The financial costs of the needed development aid are utterly manageable, just 70 cents out of every $100 (0.7%) of the national incomes of the donor nations.” Only Sweden, Norway, Netherlands, Luxembourg, and Denmark have reached and exceeded the 0.7% goal. Canada sits at 0.32%.
He is particularly harsh in his criticism of the United States, which gives 0.15% of its Gross Domestic Product to development aid while spending five percent on its military. He asks: Is a superpower that devotes 30 times more in spending to the military than to development aid a reliable partner in the fight against extreme poverty?
Call to Open up Trading System
Meanwhile, economist and development expert Paul Collier sees trade as the escape route from poverty. In his 2007 book, The Bottom Billion, Collier says a “bold new plan” is needed that must have the support of the world’s rich, industrialized nations. The plan would be to set up preferential trade policies to help the poorest of the poor sell to the wealthy nations.
The world’s trading system has been rigged in favour of the big nations for decades. For example, the European Union, America, and other rich countries pour tens of billions of dollars into subsidizing agriculture (According to the Farm Subsidy Database, the United States alone subsidized agriculture to the tune of $177.6 billion between 1995 and 2006.) This squeezes out developing world farmers who can’t possibly compete with the artificially low prices of food in wealthy nations.
Bill Gates Calls for “Creative Capitalism”
And, the world’s richest person also sees business as a way out of the poverty trap. In 2008, the head of Microsoft gave a speech to the World Economic Forum in Davos, Switzerland in which he talked about what he calls “creative capitalism.”
Clearly, when the world’s poorest people can’t afford to buy any products there is no way companies can make a profit. Gates suggests another incentive is needed – recognition.
He said, “Recognition enhances a company’s reputation and appeals to customers; above all, it attracts good people to an organization. As such, recognition triggers a market-based reward for good behaviour.
He cites his own company’s donations of $3 billion in software and cash as an example. And, he says Microsoft is developing an interface that will allow illiterate people to use a computer. He gives another example of the Serum Institute in India, which found a new way to make a meningitis vaccine for 40 cents a dose.
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