Can throwing money at a country erraticate poverty?

 Lionheart (@TigerRush)3 years, 11 months ago

The answer is no,

The amount of foreign aid can actually have an adverse effect, turning potentially beneficial political institutions into toxic ones due to the undermining of the democratic process.  Without an adequate capacity/need to tax, a state can simply deny its citizens many of the protections that are taken for granted in the rich world.   Evidence? The Official development assistance (aka the amount of foreign aid received from donating countries) of China , India and South Africa in recent years (from 2015) has been less than 0.5% of national income and only around 1% of total government expenditures.  Yet China and india are both booming economies with the largest reductions in poverty rates.  In many parts of Africa however the ratio of aid to government expenditure has exceeded 75% .  Given the inability to change the amount of aid short run governments are strongly dependent on aid and the respective governments have a lack of need for consent to.  The problem is foreign aid doesn’t dictate how the government will spend it and can easily keep these inflows for themselves.

African presidential systems are quite like those of the middle east with the large oil profits, there is strong military oppression.  Even if the donors see what is happening with, it is rarely in the interest of donor countries to withhold aid regardless of violation of agreements and lack of accountability between the two parties(due to the belief that donors can only do good).  The problem is a lack of direct information on outcomes for the local people and donating countries. 

I’m sure we can make them more accountable?  Due to time inconsistencies, if threatened the donor countries suffer a lose-lose situation in which many innocent bystanders are hurt and the normal good relations between donors and the government are also disrupted.  Foreign countrractors would also likely not be paid.  Kenya is such an example where there is a dance between donors and presidential institutions, the donors become exasperated by the corruption of the presidentiary, turn off flow of aid.  Parliament discuess how to raise revenue for the government to meet it’s obligations, 

Another information symmetry is the use of donors funds freeing up other funds to use for non-approved activities.

December 13, 2016 at 6:26 am
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