Preface
This week I came across an Instagram post commenting on recent politics with a caption encouraging readers to comment on poor decisions made by political leaders. While scrolling through these comments, I noticed there were a lot of people commenting about how Canada and America “give all their money away in foreign aid.” After reading dozens of comments like this, I now realize that many people are under the assumption that Western countries guzzle money in to developing countries that they could be using domestically. Further, some believe that this has a significant impact on living conditions within Canada and the US. The bottom line is that this is not at all true, although it is a widely believed misconception. Let’s explore the reality of foreign aid.
How much money is actually put into foreign aid?
The first part of foreign aid politics that is super important to understand is how much money is distributed internationally. As I have recently learned, a lot of people are under the assumption that developed countries send a significant amount of their income to developing countries. Which then takes away from domestic development initiatives, military funding, etc. It is true, countries like Canada and the United States send millions to billions of dollars annually to developing countries. However, since these countries are so wealthy, this only amounts to less than 0.5% of their annual income (The Economist, 2017). So, yes, there is “a lot” of money being sent overseas. But, this amount really is minuscule and almost negligible when it is being sent from a country with a trillion-dollar economy.
The United Nations created a guideline for this exact situation. They created a target for developed countries to dedicate 0.7% of their Gross National Income to development aid initiatives. Out of all the countries in the world, the United States give the most in foreign aid and still does not meet this 0.7% target. I recommend you watch this short video by The Economist which explains that in 2015, the US gave 0.17% of their Gross National Income. However, this is much less than other wealthy countries such as Sweden and Norway, both these countries gave over 1% of their GNI.
Although I’m sure some may argue that billions of dollars could also be put to good use in the country of origin, my point here is that foreign aid is not draining countries of their resources. Surely if the government wanted to address an internal issue, they would find the means to pull funding from the other 99.8% of national income.
The Functions of Foreign Aid
Another aspect of the misconception that developed countries “give all their money away,” is that it is solely for the benefit of developing countries. If you believe that wealthy countries send monetary aid to others purely out of the goodness of their hearts, unfortunately I must be the bearer of bad news. You may have given too much credit to global leaders to be generous and helpful simply because it is a good thing to do.
Foreign aid was created in the 1960s because humanitarian crises were able to reach international audiences over the television (Swanson, 2021). So, Americans pressured the government to help those in need world-wide. Although its origins may have been humanitarian, the aid cycle that we see today is not that. There are cases where rich countries give to emergency relief organizations such as the Red Cross. These funds are often used to provide food, clothing and medical supplies to countries that experienced a natural disaster or internal conflict. This kind of aid is more in the “humanitarian” category. On the other hand, there is also a large part of aid that is given from country directly to another country. And, there is likely a strategically beneficial reason for a rich country to send money abroad.
For the receiving country, their income is subsidized by the donor country. There are numerous reasons why this actually is not a beneficial process for developing countries ,but that is a complex topic for another day. As for the donor country, they receive many strategic benefits in return. A quote in the Washington Post eloquently explains this as “the United States gives aid ‘for ‘us,’ not for ‘them’’ – to support our strategic allies, our commercial interests or our moral or political beliefs, rather than the interests of the local people” (Swanson, 2021). Arguably the most likely reason for foreign aid is to gain allies and loyalty (or dependence) abroad (AfroPolitical TV, 2020).
This is the perspective that the notion of rich countries “give away all their money” is missing. If a donor country is sending money to a developing country, it is because they see potential for an ally, a sources for resources they can benefit from, or a country that needs funding to contribute to their goals or interests. This is not by any means a purely humanitarian cause.
Concluding Thoughts
As mentioned above, there is a multitude of evidence and cases that indicate foreign aid is actually more harmful for developing countries than it is helpful. I will most likely write a post about the harmful effects of foreign aid in the future, as it is an extremely intricate issue that I would like to put into simple terms. But for now, I think it is important for us all to be aware of what foreign aid is really all about. The concept of rich countries “giving all their money away” and “solving problems in other countries rather than their own” is widely spread but definitively false.
My point in writing this post is to encourage you to think critically about why foreign aid is sent where it is sent, and to consider the relationship between the donor and the receiving country. Foreign aid is an insignificant amount of money for rich countries, but goes a long way in securing international benefits. In a perfect world, innovative and forward-thinking solutions to international health and equity issues would be funded by wealthy countries to assist those without means. However, in reality, this “aid” is not a free handout. Almost all international relations deals have a catch, and will end up in the favour of rich governments.
Sources
AfroPolitical TV. (2020, February 15). Foreign aid in Africa Explained: Benefits and problems [Video]. YouTube. https://www.youtube.com/watch?v=7l74VxPpblw
Swanson, A. (2021, November 25). Why trying to help poor countries might actually hurt them. Washington Post. https://www.washingtonpost.com/news/wonk/wp/2015/10/13/why-trying-to-help-poor-countries-might-actually-hurt-them/
The Economist. (2017, December 8). Foreign aid: who gives the most, and where does it go? [Video]. YouTube. https://www.youtube.com/watch?v=0tCPl0veqvc
Leave a Reply