Foreign aid going to waste

The Norwegian Department of Foreign Aid is under heavy criticism from state auditors for gross misspending of aid money. Funds are wasted on pointless projects and expensive consultants, and there are few routines for retrospective self-evaluation and verification that the money has gone where it was supposed to go, that it actually did any good:

Norway has donated up to NOK 350 million (nearly USD 50 million) a year to Mozambique for the past several years. The state auditor's report, conducted by the agency called Riksrevisjonen, questions whether the money ever has reached those most in need.

More than NOK 50 million, for example, was supposed to provide electricity to villages, but the power lines aren't being used because rates charged are too high for local consumers. Other funds were earmarked for redevelopment of health stations devastated by floods, but the money instead went to pay consultants.

Most foreign aid is routed through NORAD, the Norwegian Agency for Development Cooperation. The government is now planning, (possibly unrelated to the auditor's report) to strip NORAD of many of its powers, and move more responsibility for foreign aid up to the Foreign Department.

I'm not against foreign aid, but there are many ways to "aid foreigners", and many of them are useless, and others harmful. And there are many ways to give foreign aid, too, semi-voluntarily through taxation, or fully voluntarily on your own. The last one is probably morally superior, (giving your own money as opposed to giving other people's money), and I don't fully understand the argument that people are too selfish to donate to charity, so it must be done through taxation or it won't happen at all. Norway's foreign aid budget is among the largest in the world, in percent of GNP, and this is a point of national pride. Doesn't this suggest that a significant number of Norwegians believe that foreign aid is important? (And if doesn't, do we really have a right to be proud of spending money we don't actually want to spend?)

But this is a side-issue here. Social democracy places a lot of responsibilities in the hands of the state that really belongs with individuals, that's how we always do things we believe are right or necessary in Norway, and it doesn't really have anything to do with foreign aid. It's just a question of a basic attitude towards responsibility and private property. We should change that attitude, but that'll take time, and the question is what we can do about foreign aid now.

The danger with foreign aid is that we let our efforts be motivated primarily by guilt. If you feel guilty about being rich, (and I think a lot of people do, and redirect that guilt onto the country/culture they live in), the act of giving away money helps to ease your guilt. But giving is only one half of helping people - receiving is the other. Abstract guilt tells us that we "must do something", but it doesn't much care what that something is, as long as it hurts. Norway and other Western countries could propably help poor countries more than we do today by making cuts in our agricultural subsidies, and lowering trade restrictions. But that wouldn't feel the same to people who are motivated by guilt, even though it would be morally equivalent. At best it would ease their guilt once, when the subsidies are cut, but foreign aid as a permanent post on the national budget eases their guilt every time they see it mentioned on the news.

Doing what's right is not the same as doing what eases your guilt. Morality takes the whole picture into account, guilt fixates on one issue, panics and pulls the hand brake. That may be why Norway has always been more eager to give foreign aid, than to ensure that the right people receive it. We have improved, (our money is apparently no longer used to prop up corrupt officials and petty dictators), but as the state auditor's report shows (or will show, according to the leaks), we still have a long way to go. There's no excuse for this.

There are probably good projects out there that I don't get to here about, ones that are efficient, encourage self-reliance, and leave something good and lasting behind. Ones that don't sabotage the local economy but helps it get started. At least I hope there is, or all our money is being wasted, not just most of it. But I also believe that, apart from disaster aid, the best way to really help the third world is indirectly, by giving their farmers the same opportunities as our own farmers to sell us food. It'll be slow, and it may not ease anyone's guilt for surviving the 20th century as filthy rich consumerists, but that's not my top priority here. Helping other people is a good thing to do, altruism is a virtue, and perhaps if we stopped being so selfish about how we help we could do more good than we do today.


Yes indeed. I might expand it with examples showing well-intentioned "help" that does not help at all. Like the ban (unfortunately originated, I fear, here) on DDT, far more emotion based (it is made in a factory, so it must be bad) than science based. Or the insistence that once a certain percentage of a school district is of first-generation immigrants speaking language x, there must be seperate language x classes for the first six years - usually done against the wishes of the immigrant group, impossible for them to get their children out of, and then the school system expresses surprise when in grade seven the children are unable to cope for some time with the material since they cannot understand what is said or written... Those first years are not dual-language classes, after all: this year some school systems near me got into trouble when they had to let a number of teachers and administrators go - the government had passed a ruling that they must dispay a certain level of proficiency in English (roughly fourth-year) and many could not.

John: When I came to the US as a nine-year-old I couldn't speak English at all. I was plunked down into an American classroom, and slowly but surely within 3 months I understood English; within 6 months I was speaking it.

Was it hard? Certainly. I remember being called out of the classroom by the principal in order to come and calm my younger, 7-year-old sister, who was having panic attacks due to fear because nobody spoke Finnish. But on the whole everyone was willing to help, - Americans are fundamentally more understanding of immigrants than others - and it was fairly easy eventually to make new friends.

So, yes, I agree. Immigrants should be forced to learn the language of their respective countries as soon as possible. The advantages speak for themselves.

Bjorn: I couldn't agree with you more. I see foreign aid policies as they pertain to the Nordic countries as a form of payola, or tribute: by paying out foreign aid the Nordics buy protection from Third World criticism.

Foreign aid has dubious value. The elimination of agricultural subsidies would be of much greater benefit for the developing world, as well as the Western consumer. Another area which might be more successful than direct foreign aid is the financing of more banks which practice micro-credit loans to poor people. These banks, however, should be operated on a for-profit basis, to encourage competition. But the capital base could easily be supplied by countries in lieu of foreign aid.

In this story - Paper Money Can't Save Billions From Poverty

The writer thinks that too much foreign aid is wasted and in the end it will not do what was intended.

The U.N. recently announced that the world population will grow by 40 percent in the next half century.

The U.N. believes that wealthy nations must dramatically increase foreign aid to underdeveloped countries in order to stave off a humanitarian disaster that could result from this third-world population explosion.

Foreign aid brings mostly corruption, while exacerbating the underlying problems. The United States and other wealthy nations should shun the billion-dollar publicity-stunts and instead commit to developing democratic institutions that foster free markets.

"Government ODA per GNP" would obviously be the data of choice for small countries who don't contribute in other ways
-Not included in your data:
-Personal donations
-NGO contributions / activism
-Private remittances (twice total gov't ODA sum)
-Accepting Asylum
-Emergency rescue/logistics (think helicopters delivering water after the tsunami)
-UN contributions
-Non-cash development aid (Peace Corps, etc.)
It is hard to see why none of these forms of aid, which are many multiples larger than cash handouts and loans, are totally disregarded; and why many nations who shun immigrants and asylum seekers, refuse dangerous peacekeeping, are isolationist, and in general act selfishly other than cash handouts to dictatorships, are to be "praised"?

My first personal exposure to foreign aid goes back more than 40 years to my student days when I was a student in an Engineering institution in India. A west European country had offered aid to the Indian government to upgrade electronic instrumentation in universities and part of it was allocated to our institution. As senior students, we created a list of instruments, which would have really benefited our lab. Our list included instruments mostly manufactured in the U.S.A, U.K and Germany and we stuck to those because of compatibility and performance issues. The list was reviewed, submitted, and in due time, totally rejected, because we forgot the real important condition that the items must be manufactured by the donor country. The first lesson I learnt was that the need of the aid recipient was not important, but the benefit to the donor was critical.

Later in life, I emigrated to Canada and worked for a major U.S electronics company, and, at one time, was involved in bidding for international telecom. contracts. When we bid for a contract in Europe or North America, we had to often offer huge discounts, by as much as 60%, because the bids were open and global and competition was fierce. However, whenever a government aid agency required a bid for a system to be financed by aid money to a developing country, there was no need to offer any discount. Those countries would pay the full list price for everything. It was true that the financing terms were good, and there was no immediate payment necessary. However, those poor countries would be paying through their noses for many years. Wouldn’t they be much further ahead to reject foreign aid and try to acquire these systems by open global bidding and make full payment on receipt of goods? You bet they would.

This is my perspective of foreign aid. Is it any wonder that countries like China and India are currently offering foreign aid to other countries? They have now got products to sell.


Trackback URL: /cgi-bin/mt/mt-tb.cgi/402

PRESTOPUNDIT -- feeding memeorandum & econRT daily: IN ONE YEAR private citizens in Americans sent, December 29, 2004 07:07 AM

American Outlook > American Outlook Article Detail" href="">$35.8 billion overseas to help out non-Americans. The year used for those figures was 1998. The numbers today would b...

Post a comment

Comments on posts from the old Movable Type blog has been disabled.