Transcript To Aid or Not to Aid – That is The Question!

To Aid or Not
to Aid – That
is The
Question!
International Aid and
International Development
• International aid (aka foreign aid) is a voluntary
transfer of resources from one country to another,
given at least partly with the objective of benefiting
the recipient country.
• Development aid is aid given by developed
countries to support development in general which
can be economic development (ex. loans to build
infrastructure) or social development (ex. building
schools or hospitals) in developing countries. It is
distinguished from humanitarian aid as being aimed
at alleviating poverty in the long term, rather than
alleviating suffering in the short term.
• Donations can come on the form of
money, goods (food, weapons, water,
medicine) or expertise (knowledge)
• Aid may be given by individuals,
private organizations, or
governments.
• The main recipients of development
assistance are developing countries
and the main contributors are
developed countries.
Marshall Plan
• After WWII, George C. Marshall, US Secretary
of State, proposes a plan to help rebuild noncommunist Western European countries
devastated by war
• Altruism – doing an act out of kindness or
generosity vs. doing something to get something
in return (Random Acts of Kindness Day)
• U.S. motives
• 1. Money – U.S. companies are the market for
W. Europe to rebuild
• 2. Prevent the spread of communism (ideology)
during a time of hardship when countries are
very vulnerable
Motives for Assistance?
• 1. Religious/Humanitarian Motive –Wealthy parts
of the world (and some Middle Eastern
countries) have a strong belief that it is important
to provide assistance to those in need.
• 2. Economic Motive – Giving assistance may
benefit the economy of the donor country. Aid is
given in kind (food, industrial equipment) or is
linked directly to purchases from the donor.
• Example Canada may provide wheat from
Saskatchewan or provide money to purchase
farm equipment from Ontario. This is commonly
known as tied aid.
Motives for Assistance?
• Political Motive – Assistance may be given to
foster strong relationships between the donor
and recipient (or not given to punish a country
that a donor might disapprove of for whatever
reason).
• Historical Motive – Assistance is often linked to
former colonial relationships. In Canada we
have a stronger tradition providing assistance to
former British or French colonies. Recent article
– Canada pledges 43.4 million in aid to
Francophone African countries (to protect
mothers/children)
Aid after the Marshall Plan
• UN commission led by then Prime Minister, Lester B.
Pearson, sets target of countries to aim towards
contributing .7% of country’s GDP (still the standard
target used today)
• After WWII, (1950-80’s) development assistance was
fairly successful (indicators such as life expectancy,
fertility rates, infant mortality, % of population with
diseases related to poverty and hunger)
• 1960’s was the Decade of Development (peak of
assistance), while the 1980’s became known as the
“Lost Decade” (assistance starts downward spiral)
Aid or Not to Aid??
• Why did aid start to taper off?
• Cold War – countries were funding wars vs. aid
• Developing a periphery country is more complex vs. a
core country –lacking infrastructure, corrupt
governments etc.
• Flawed models of aid – imposing core economic models
on developing countries!
• 1. Food aid – can be taken by corrupt leaders, dumping
food can depress local food markets
• 2. Mega-projects, like dams can displace many people
and push them into poverty or cause environmental
problems that affect the health of locals
Sources of Assistance
• Two different sources of development assistance
• 1. Official development assistance (ODA) comes directly
from the government (an example of this is CIDA)
• An example of ODA in Canada is the Canadian
International Development Agency (CIDA) which not only
provides assistance to countries directly, but also funds
NGO’s working in developing countries
• 2. Private development assistance (PDA) which is
delivered via NGO’s (non-governmental organizations)
• Examples include Free The Children, Oxfam, Red Cross,
Engineers Without Borders
Canada’s Foreign Aid
• Initially Canada was generous with aid, and
likened to Scandinavian countries (Denmark,
Finland, Norway, Sweden)
• The U.N. has once again asked that the
developed rich countries try and meet this target
to help reach the Millennium Development
targets of reducing poverty and hunger by half
by 2015
• At present, Canada provides .34% of its GDP in
foreign aid
• Canada’s GDP is $1.4 trillion x .7% = 10 billion
dollars
Confused Eh’d?
• 1995 earthen dam breaks in Guyana
• Dam was built to hold waste from the Omai gold mine
owned by Cambior (a Canadian mining company)
• When the dam broke, vast quantities of cyanide-laden
water was released into a local river which was a vital
source of drinking water for local people and the most
important fishing source in the country (not good)
• CIDA funded the training of workers in the Omai mine,
and…
• At the same time provided funds for activist indigenous
groups who opposed the dam and predicted its collapse
Icewine and Lingerie Aid
• A recent report of CIDA found that
$108 000 in aid was given to a Niagara
firm who was studying icewine prospects
in China, and;
• $103, 000 to a Montreal company who
makes women’s underwear in China
• Question – Should aid be given to help
one of the emerging country’s in the world
or be reserved for the poorest of nations?
Types of Assistance
• Aid can be broken into three broad
categories
• Foreign/Emergency Aid
• Military Aid
• Development Aid
Types of Aid
• Humanitarian or emergency aid is assistance used to
alleviate suffering caused by a humanitarian crisis
such as genocide, famine, or a natural disaster
(Hurricane Katrina, Asian tsunami of 2005)
• Aid could be in the form of food, water, temporary
shelters, medicine, clothing etc.
• Recent emergency/humanitarian aid from Canada to
• Haiti – cholera
• Indonesia – after naturals disasters tsunami/volcano
• Pakistan – money to help rebuild agriculture sector hit
by flooding
• Japan – earthquake/tsunami
Two Sides of Emergency Aid
• Food aid can help feed
people in times of
emergencies
• "Foreign aid works
directly against the
hungry." U.S. aid in
particular is used to
promote exports and food
production -not to
increase the poor's ability
to buy food. ''Even
emergency, or
humanitarian aid, which
makes up five percent of
the total, often ends up
enriching U.S. grain
companies while failing to
reach the hungry."
Military Aid
• Military aid is used to
assist an ally in its
defense efforts or to
assist a poor country in
maintaining control over
its own territory.
• Americans supplying
weapons to the Afghans
to fight against their
enemy the Russians
• Canada trains
police/army in
Afghanistan to help
secure itself vs. relying on
our aid
To Aid Or Not?
• Many people feel that foreign aid is a band-aid
solution to deeply rooted problems within the
recipient countries, and instead of having an
incentive to fix the problem, become dependent on
handouts from the donor countries
• Some countries also suffer from aid fatigue,
whereby they see that no real progress is made
within a country from to which aid is provided, and
start to question if aid is still necessary
Development Aid Is BEST
• Instead of money or food, the country should be
provided with the means to help them develop
their own economy, thus becoming less
dependent on foreign aid
• This involves working with the government,
NGO’s and local communities
• It places an emphasis on the sharing of
information and education to help the local
populations get the right type of resources they
need.
Development Aid Continued
• Instead of providing a country with fresh water,
teach them some simple methods to construct
water purification systems
• Instead of providing food aid teach them about
basic farming techniques to conserve topsoil so
they boost their local harvests
• Development aid strives to provide long-term
solutions to problems within a country (kind of
like preventative medicine)
• Development aid is also grassroots (trying to
solve the problem at the local level vs. just giving
handouts)
“Give a man a fish and you’ll feed him
for a day, teach a man to fish and
you’ll feed him for a life”
Give a man a fish and you feed him for a day.
Teach a man to fish and you feed him till stocks run out.
Teach a man to grow fish and you feed him for a lifetime.
Tied vs. Untied Aid
• Tied aid is foreign aid that must be spent in the
country providing the aid (the donor country) or
in a group of selected countries.
• Untied aid is when the country receiving the
aid, can spend the money as they choose.
• A developed country will provide a bilateral loan
or grant to a developing country, but mandate
that the money be spent on goods or services
produced in the selected country.
• This means that aid subsidizes corporations in
the donor country instead of using resources in
the recipient country, which would in turn
stimulate their economy more
Absolute Power
Corrupts Absolutely
• A World Bank study has shown that aid is being directed at the least
economically free countries.
• Often times aid is intercepted by corrupt officials (rich) and never
gets to the intended destination (poor)
• More often now countries are funding NGO’s (such as CIDA funding
NGO’s) - Why?
• NGO’s use this money in a more responsive, less bureaucratic
fashion than would a large government or international agency
• Recent examples
• Canada funding Afghanistan which is cited as one of the most
corrupt nations on the planet
• Ethiopia politicizing aid – report suggesting that aid ($150 million)
given from Canada to Ethiopia is used by the ruling party to reward
supporters of the party. (ie) refuse or withold aid to starving families
unless they refuse to support the party (this country is one of the
largest recipients of aid)
Trade, Not Aid
• Other critics contend that instead of aid,
developed nations should lift trade or
economic pacts between rich nations as
they often isolate the poorest countries,
thereby keeping them in poverty.
• Focus on fair trade vs. free trade
Where does my money go
anyway?
• Over the past few years, reports are coming out that
some agencies spend large amount of donated money
on administrative costs (advertising, websites,
transporting aid, salaries etc)
• In some instances up to $.80 per $1.00 is spent on
administrative costs, so essentially if you give an
organization $100.00, only $20.00 actually goes to help
the people that need it the most
• Remember to ask what percent of you dollar is being
eaten up by administrative costs, and if the organization
is using third-party companies to fundraise for them. Is it
really not-for-profit if this is happening?
Transparency…
• The International Aid Transparency Initiative (IATI)
is a global campaign to create transparency in the records
of how aid money is spent. The initiative hopes to thereby
ensure that aid money reaches its intended recipients. The
ultimate goal is to improve standards of living worldwide
and globally reduce poverty.
• The initiative was launched on September 4, 2008, at a
High Level Forum on Aid Effectiveness held in Accra,
Ghana. The goal of the forum was to refocus attention
worldwide on the steps needed to reach the United
Nations' Millennium Development Goals.