Aid we give to the Third World is more harmful than helpful

Philip Stevens: Aid we give to the Third World is more harmful than helpful

Wednesday, 18 November 2009

Despite record levels of foreign aid for health, almost no progress is being made in improving child mortality in the poorest parts of sub-Saharan Africa.

Many countries are going backwards. This is not surprising. The UN and British government – egged on by NGOs and activists – has bet the house on the daft idea that if western governments transfer enough money to governments in poor countries, health systems will magically improve and medicines will get to sick kids. As far as strategies go, this is a turkey.

Once it makes it to the recipient government, what happens to that money is anyone's guess. There is almost no data on how aid money makes its way through recipient health systems.

We do know, however, that much of it is lost to corruption – from ministers skimming off their share of grants, to local health workers charging patients for nominally "free" services. Then the Western consultants and NGOs need to take their cut.

When some aid money does make it to local clinics, World Bank research shows it is most often the educated, urban classes who benefits, rather than the rural poor for whom it is really intended. To cap it all, the influence of Western NGOs on donors has also meant that "fashionable" diseases such as HIV get the lion's share of funding, to the detriment of less high profile problems such as pneumonia, which kill many, many more.

In the short-term, donors could spend taxpayer's money more wisely by bypassing governments altogether, instead putting health services out to competitive tendering amongst the voluntary or private sectors. In the long term, we can't hope to improve child mortality by simply beefing up aid. There is no way western aid agencies can fund a clean water supply, health services and a decent daily meal for every child in Africa. Even if such a thing were logistically possible, such large inflows of hard foreign currency would wreak havoc on fragile local economies.

In the end, the only way to solve child mortality is by fostering economic growth.

The author is Senior Fellow at the International Policy Network. This is taken from the Independent's World Vision blog: www.independent.co.uk/theaiddebate

You can start your own Independent Minds blog at www.independent.co.uk/blogs

Here is the evidence

thomas78 wrote:

Wednesday, 18 November 2009 at 06:13 pm (UTC)

I would refer your readers to the book "Dead Aid" by Dambisa Moyo. She clearly outlines how aid creates negative incentives, breeds corruption and wipes out the fledgling entrepreneurs who would have previously gone on to become Africa's big employers.

It is refreshing to see more people waking up to the reality that Africa is not merely a playground for NGOs looking to make a name for themselves and take all the credit for what little improvements there have been.

Your readers can find out more about alternative solutions to aid at http://www.dambisamoyo.com

John Stossel - Hallowed be thy name

Government Makes Another $98 Billion in Improper Payments »

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  November 17, 2009 03:46 PM EST by John Stossel

  Bogus Stimulus

  Kudos to the Washington Examiner. They’re keeping tabs on the Obama administration’s phony stimulus claims. They’ve set up an interactive map that documents instances of government exaggeration-- or lies --over how many jobs were “created or saved” by the $787 billion stimulus package.

  The Examiner has found that just over 10 percent of the jobs supposedly “created or saved” are bogus. I’m not surprised.

  Here’s the White House’s reaction, or explanation, or excuse making.

  Here are some particularly egregious examples from the Examiner:

  Sacramento Bee: The California State University system received $268.5 million in stimulus funds and claimed that the money allowed them to save over 26,000 jobs. But when pressed, the University officials admitted they weren't really going to lay off half their workforce, and that in fact, few or none of these jobs would have been lost without the stimulus. "This is not really a real number of people," a CSU spokesman said. "It's like a budget number."

  The New York Times: A $1,000 grant to purchase a single lawn mower [in Arkansas] was credited with saving 50 jobs.

  Tacoma News-Tribune: Of the 34,500 jobs allegedly saved or created by the stimulus in Washington State, 24,000 belong to state teachers already under contract to finish out the school year, whose jobs were never in jeopardy ….

  Atlanta Journal-Constitution: A joint venture [in Oklahoma] that received six military contracts counted the same 10 jobs six times.

  Chicago Tribune: [S]timulus funds were said to have saved the equivalent of 382 full-time teaching jobs -- 142 more than the [Dolton, Ill.] district actually has.

  Chicago Tribune: The city claimed to have saved the jobs of 473 teachers with its $4.7 million education stimulus grant. The [North Chicago] district employs only 290 teachers.

  Greenville News: "The Greenville Housing Authority ‘saved or created’ 118 jobs by use of federal stimulus money, according to the Obama administration. The agency only has 35 employees."

  Even if the jobs really were “saved or created”, that’s not real job creation. There is no new wealth created. All the stimulus did was shift resources to stimulus recipients, at a hidden cost. That money would have been spent or invested privately by other people if it hadn’t been taxed away. It’s Bastiat’s broken window fallacy in a nutshell.