It’s no secret that development aid has a paltry level of success in terms of bringing about long-term growth. For years, critics of aid like Professor William Easterly and Lady Dambisa Moyo have repeatedly argued that aid can often do more harm than good, enabling corrupt actors to stay in power while very little assistance reaches those in need.
Nevertheless, if we are being honest, aid’s ineffectiveness is not going to stop it from flowing. When the UK reduced its foreign aid budget in 2021, the outrage from many aid organisations made headlines, and accusations that tens of thousands of the world’s poor would die as a result were put forward by several prominent NGOs. It remains unclear what the new Labour Government’s approach to aid will be, but the most likely scenario is a continuation of current policy. Somewhere around £10-13 billion in official development assistance will flow out of the UK to various countries across the world.
Given that aid is going to keep flowing, aid sceptics need to engage in a more constructive discussion about how to best use these funds. While there is no real push to end aid programmes among any major party in the UK, there may be more political will for the notion that aid should be repurposed to address different ends. In other words, if the money is going to keep moving, how can we ensure that it does something useful?
The first step to making aid work is to recognise that it will not have a massive impact on the macroeconomic performance of recipient countries. Decades of evidence shows that aid, at its best, contributes a marginal amount to overall economic growth. Entrepreneurial activity, institutions, the investment environment, government repression – these are the factors that determine whether or not nations enjoy prosperity. These factors are out of the UK’s hands, and there is no shame in recognising that.
Nevertheless, just because aid’s impact is marginal does not mean there isn’t a way to give aid well. To make aid function, we should ensure that the programmes it funds have one common goal: empowering individuals in recipient communities to attain more freedom in economic, political, and social life. When this occurs, individuals who know their context and the problems their community faces can use their entrepreneurial energy to provide solutions.
In the past, aid agencies and development experts attempted to isolate specific development challenges in countries, come up with a technical plan to solve that challenge, and then implement that plan with Western money. In the vast majority of cases this seems to not have worked, and it isn’t that difficult to understand why. The notion that people in London, Brussels, or Washington DC can come up with a viable plan to transform an economy in the middle of Africa is a difficult position to hold. There are many nuances that influence economic life, how could we possibly expect government bureaucrats to know them all? Hence the need for prioritising rights. The more we recognise our inability to solve problems halfway across the world, the faster we can empower those who actually can.
This idea of prioritising rights was encouraged by Professor Easterly 8 years ago. In ‘The Economics of International Development’, he states:
The problem of poverty is not a shortage of experts: it is a shortage of rights. There is a very long literature in economics in which rights are, themselves, a problem-solving mechanism that makes the technical solutions happen. It is the ability of us as free citizens in our own societies and it is the ability of poor people in their societies to hold the suppliers of their needs, both private and public, accountable that makes technical solutions happen.
What Easterly is telling us is that the people who know the solutions to the problems poor people face are probably the poor people themselves. Sure, there may be times when aid can provide auxiliary services which help educate and support recipients if they really don’t understand how to solve an issue. For example, I would not expect a random person in a developing country (or really anywhere in the world) to understand how HIV/AIDS is transmitted without being told by a medical professional. But in general the solutions to poverty are not likely to come from outside influences. Individual people, when they have the ability to create value, earn profit and engage in economic activity without fear of expropriation will be able to transform their economies in ways that UK aid experts simply cannot.
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