Why ODA makes sense even though it sometimes fails

There is a long tradition of arguing that aid is destructive. In the early 80s, Brigitte Erler wrote a book called “Tödliche Hilfe” (deadly aid), which was quite successful in Germany. In more recent times, international bestsellers with a similar message were published by Dambisa Moyo (“Dead aid”, 2009) and William Easterley (“The white man’s burden”, 2006).

Typically, the reasoning of fundamentalist aid sceptics includes the following points:

• Aid was invented to abolish poverty after the Second World War. More than 70 years later, poverty persists, so aid must have failed.
• Aid spending is well meant, but it makes receiving nations dependent and complacent, and stifles their motivation to take their fate into their own hands.
• Aid money is often siphoned off by prosperous elites and fosters a culture of corruption.

There are, of course, many versions of and many nuances to these arguments. They are not entirely without merit, but they are generally overblown. The truth is that, while some ODA programmes and projects do indeed fail, others succeed. Moreover, our species needs international cooperation to rise to global challenges that nation states cannot manage on their own, such as climate change, fair rules for world trade or stemming diseases.

First of all, it is important to stress that humanity has been making progress, as Matthias Meis of Germany’s Federal Ministry for Economic Cooperation and Development recently did on our website. I’ll just quote one example: “The share of the world population’s extremely poor people has decreased dramatically too. About 90 % of the 1.1 billion people who lived in 1820 were struggling at the subsistence level. In 1970, that was true of 60 % of 3.6 billion people. In 2011, only 14 % of 7 billion people were extremely poor.”

More generally speaking, the international community did not achieve the Millennium Development Goals as aspired, but figures for things like school enrolment, infant mortality or access to safe drinking water improved considerably. It would be absurd to claim that all success stories are due to ODA, but is equally absurd to state that ODA did not achieve anything at all, but actually blocked progress towards the goals it was meant to serve.

Another thing the radical aid critics tend to miss is that some countries have made excellent use of aid. South Korea is an example. In the 1960s, its standard of life resembled that of African countries. Today, it is a member of the OECD, the umbrella organisation of rich countries. It “graduated” from being an aid recipient decades ago, and has since joined the donor community. Quite obviously, ODA did not block progress in South Korea.

Another example is Bangladesh. The country is dramatically poor, and it was generally considered a basket case after its independence war the early 1970s. Today, its statistics concerning maternal mortality, literacy and life expectancy are better than those of India and Pakistan. Although the country has a reputation for corruption, its civil service has actually proven quite good at using donor money to build physical as well as social infrastructure. If aid was poisonous, Bangladesh could not have made the progress it did make.

The aid sceptics have a tendency to pick countries where things have gone worse than in Bangladesh to prove that aid is a problem. But the point is not that things are miserable in Niger or the Central African Republic. To prove that aid is destructive the sceptics must explain why it did not prevent progress in countries like Rwanda, Senegal or Ghana, which are all aid recipients.

Development professionals like to emphasise that their job is not aid, but development cooperation. Where all parties involved accept their respective responsibilities, that term makes sense. In those places, very ambitious programmes can be launched, such as improving national revenue services for instance. Unfortunately, such a sense of responsibility cannot be taken for granted, and corruption does indeed sometimes thwart aid efforts.

Things would be much easier if ODA was exclusively focused on fighting poverty and its causes in developing countries. In the real world, things are more blurry, because ODA is a component of foreign policy making. Aid money may serve geostrategic considerations, such as the fight against international terrorism or illegal drugs. It can also be a component of policies designed to safeguard access to commodities or to ensure that refugees do not come to rich nations’ borders.

Many academic studies tell us that development will only happen where there is a sense of national ownership. On their own, donor governments cannot bring about positive change in Africa, Asia or Latin America. They depend on forces within the societies concerned assuming responsibility for a better future. To make ODA work, donors are well advised to accept their partners’ priorities and rely on their institutions.

This insight, by the way, has been donor doctrine for over a decade, spelled out in the Paris Declaration on Aid Effectiveness of 2005. In principle, donors should only cooperate with governments of developing countries if and when those governments adopt reasonable policies.

This is easier said than done, even if donor governments do not prioritise interests of their own. The reason is that the need for (humanitarian) assistance tends to be greatest where governments are irresponsible or worse, non-existent. Where things go well, chances are good that a nation will eventually graduate from being an ODA recipient the way South Korea did.

Where disaster strikes, in contrast, the suffering is so great that humanitarian relief becomes indispensable. For this reason, donor governments tend to be involved in the affairs of developing countries with poor governance. Failed states matter in particular, and it would be naïve to expect a strong sense of national ownership for development in these places.

Andrew Mitchell is a former British secretary for international development. He used to say that every pound invested in ODA delivered results. Such rhetoric is politically expedient nonsense. In reality, ODA is about risky investments. Some are successful; some fail. That is the nature of the game.

Some aid critics argue that the rich nations are not responsible for the poverty of disadvantaged nations, so there is no reason why they should get involved. In this perspective, the wealth of prosperous consumer societies is not based on the exploitation of workers in developing countries. Again, this is not totally wrong – shoppers in Frankfurt or San Francisco do not benefit in any way from the poverty of smallholder farmers in Africa. Tell them that cheap consumer goods are produced by exploited workers in developing countries, and their factually correct response may well be that the workers concerned would be even worse off if they did not have their jobs.

Nonetheless, the rich world does live at the expense of the disadvantaged countries in several ways. For example, the health-care systems in rich nations depend on skilled nurses and academically trained doctors from developing countries. This kind of brain drain compounds health-care problems in Africa, Asia and Latin America. Moreover, the rich world has contributed most to the emissions that cause climate change, while the developing world is most exposed to the impacts.

Aid does not always succeed, but it is not the root problem. It can be part of the solution. In coming decades, climate finance will become ever more important. It will be essential to heed the lessons learned in ODA affairs, not to discontinue international transfers. In view of the global challenges, humankind needs more cross-border cooperation and burden sharing, not less.

Ultimately, the aid sceptics are promoting the kind of right wing populism that urges rich nations to put their own interests first and leave others to fend for themselves. The strategy cannot work, because global problems will only become more daunting unless international community tackles them in joint efforts.