Cause and Effect in European Politics and Law

Harmful or useful is aid for poor countries?

Adelina Marini, May 25, 2009

The latest topic in the series of "Financial times" newspaper is about aid and how useful it is to aide financially developing countries, especially in moments of crisis. The reason for the discussion in the blog section of the paper was the book of a Zambian economist Dambisa Moyo, "Dead Aid" in which she says that developing countries received billions of dollars of aid with no result but only increasing of their aid dependency and encouraging corruption. But aid advocates claim that if aide is used correctly, it will have effect.

According to Martin Wolf, the FT's chief economics commentator, the more important question shouldn't be whether aid is harmful or not but if it is overwhelmingly so in each case. Wolf gives many African states for example that aid sometimes goes for nothing, dictators abuse with the money, corruption thrives but examples like South Korea prove just the opposite. South Korea is one of the examples for successful developing country that once received a great deal of aid, Martin Wolf writes.

But Michael Holman agrees that aid fosters corruption and a proof for that can be found from Congo to Kenya. The former FT's Africa chief editor writes that the consequences of aid are much more severe than the pro-aid activists realise because it undermines the expectations of citizens, and erodes the management capacity of the state, destroys the social contract that is at the heart of governance. In return the citizens expect the provision of basic services: roads, water, clinics and schools. It is precisely these areas in which foreign non government organisations are most active. The result, according to Holman: the responsibility of the state is diminished, its management capacity ossifies and withers … and the social contract is eroded to the point of collapse. And every year some 100,000 foreign “experts” flock to Africa to administer a system that fails the very people it is supposed to help; and every year some 60,000 of Africa’s best and brightest officially emigrate.In conclusion Michael Holman says that aid to Africa is not only mad but dangerous to receive.

Probably this same debate could be forwarded to Eastern Europe.