Foreign aid: How important is the West in fixing the world's problems?


The argument over foreign aid shows no sign of letting up as a spate of comment pieces in recent days has fought over how much good the West can do, with personal attacks erupting in an often bad-tempered dispute.

Case 1: We can do plenty

Microsoft-founder turned billionaire philanthropist Bill Gates released the Gates Foundation's annual letter early last week, titled '3 myths that block progress for the poor'.

The second 'myth' that Gates argues is holding back progress is that 'foreign aid is a big waste'. He replies:

"Broadly speaking, aid is a fantastic investment, and we should be doing more. It saves and improves lives very effectively, laying the groundwork for the kind of long-term economic progress."

The detail is laid out in an infographic-heavy post on the Gates foundation's website.

Case 2: We're bit players at best

Aid sceptic and development economist William Easterly acknowledged that "incredible progress" has been made and praised Gates for refuting the dogma that "all foreign aid is wasted", but went on to question the over-arching importance of Western assistance in a Financial Times op-ed.

"Mr and Mrs Gates promulgate myths of their own. They overstate the contribution that foreign aid makes to economic progress in the world’s poorest regions. And they exaggerate the role played by philanthropists and politicians...

The obsession with international aid is a rich-world vanity that exaggerates the importance of western elites."

Aid booster Jeffrey Sachs sent an accusatory tweet in response to Easterly which appeared to conflate 'rich world' vanity with Bill Gates's personal contribution:


British Foreign Secretary William Hague visiting a World Food Programme Center on the outskirts of Beirut earlier this year










Case 3: Don't cut aid. But it won't end poverty

Why Nations Fail: The Origins of Power, Prosperity and Poverty was hailed as one of, if not the most important book on development released last year. Its authors, former economists Daron Acemoglu and James A. Robinson, start from a similar perspective to William Easterly in a piece for The Spectator :

The idea that large donations can remedy poverty has dominated the theory of economic development — and the thinking in many international aid agencies and governments — since the 1950s.

 And how have the results been? Not so good, actually. Millions have moved out of abject poverty around the world over the past six decades, but that has had little to do with foreign aid."

The pair do not argue for a reduction in aid - "the cash can still do a lot of good" - but suggest the focus should turn to larger, structural problems - such as corrupt or failing institutions - rather than the piecemeal allocation of aid.