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How Vulnerable is Foreign Aid?

By Taylor Marvin

One of the most vocal factions in the development community are the activist and economists that believe the best hope for development the poor world is a massive scaling up of foreign aid by rich countries. This increase in aid, advocates hope, would fund advancements in third world health and human capital that would lead to sustainable development and increase standards of living, giving developing nations the boost they need to spark permanent growth. The increases in aid needed would not be enormous; most supporters of the strategy lobby for an increase of first world aid to about 0.7 percent of donor countries’ GDP, a pretty reasonable request. This view of development has become increasingly popular in recent years thanks to the advocacy of celebrity supporters and high-profile economist Jeffrey Sachs. While Sachs and company make a compelling case for the utility of rich world aid for global development their argument is weakened by how they almost take continued foreign aid by the rich world as a given. Advocates of aid-driven development tend to look at increasing the volume of aid as a donor nation motivation problem best addressed by petitioning elected officials and highly visible public lobbying initiatives like celebrity support and Live Aid type events. Unfortunately the modern political climate suggests that government aid is a lot less safe than it used to be. Almost universally rich world government are entering an era that will be dominated by budget cuts, and unfortunately, foreign aid will often be one of the first thing to go.

Source: ANES, 2008.

Source: ANES, 2008.

American conservatives are one of the rich world’s most vocal advocates of fiscal disciple, a view that governments will soon have to adopt. However, when it comes to cutting specific areas of American public spending, the only area that a plurality of conservative voters agreed to cut was the foreign aid that makes up much less than one percent of the federal budget! While this poll only looks at American conservatives the general sentiment is universal — when rich world politicians are forced to publicly endorse specific spending cuts foreign aid will be the first to go. It simply isn’t politically viable for politicians to risk being cast by their opponents as cutting domestic entitlement programs when continuing to fund spending oversees. Of course this is a false choice — in most rich countries, especially the United States, foreign aid is such a small part of the federal budget that it has no real effect on the deficit. Additionally these cuts won’t extend to all forms of foreign assistance: because food aid is motivated not by generosity but by the staple food surpluses in the developed world that are funded by agricultural subsidies that policymakers still have a political interest in preserving this type of aid is in no danger. Perversely rich world debt could lead to cuts in the type of aid most likely to effect positive change in the developing world, multilateral assistance, while continuing the food aid that actually hurts its intended beneficiaries. If supporters of aid-stimulated development wish to preserve it as a valid strategy in the fight against global poverty they’re going to have to find a better way to reach out to rich world voters. Growing debt doesn’t mean that aid has to get cut, but if its advocates can’t convince voters of its necessity it will.

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One Comment Post a comment
  1. right pointed out that Foreign aid does not make a significant component of Federal budget and should not be subject to cut. However poor countries require more of trade rather than aid

    February 3, 2011

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