One thing that we who work in the international development sector are sometimes accused of is that all we talk about is aid, aid, aid.
Aid critics (like Bill Easterly or Dambisa Moyo) try to point out that aid does bad things as well as good, or that aid flows are but a tiny fraction of global wealth or money flows to poor countries. For example, remittances sent from developed to developing countries are estimated at $372 billion in 2011, which is more than double total global aid flows. Even further, some argue that no one should be sending aid to middle income countries like India (technically a “Lower Middle Income Country“), even though there are around 800 million Indians living in extreme poverty. Some argue that aid is such a small part of most country’s Gross National Income (GNI) that it doesn’t – or shouldn’t – matter, and we should instead focus on the economy, jobs, and other macro-level issues.
It’s fair to say that no-one at RESULTS thinks that these other things – the economy, infrastructure, good governance, jobs – are unimportant, because of course they are critical. But it’s precisely because aid is such a small amount of money and it has such a disproportionately high impact on the most vulnerable that it matters. It matters immensely.
A nuanced view comes from Jonathan Glennie of the ODI in a recent article and paper, “Aid still matters once growth begins.” His findings are interesting and directly address some of the issues discussed at our National Conference this year, for example whether aid should still be given to India. By changing the frame of analysis slightly to categorise countries by their aid level rather than their income level, he gives us a new way to think about aid and its impact.
For example, he concludes:
There is much talk in the present aid debate about the pros and cons of spending aid in Middle Income Countries (MICs), but in countries where aid has long been very low, such as India, Nigeria and most of Latin America, why should further reduction be necessary? Moving up to MIC status does not necessarily mean that the poor will be better off, certainly not in the short term. Even as countries grow richer they are still home to many poor people and even when people move above the $1.25 or $2 day ‘ceilings’ they may still be miserably poor compared with western standards. If aid has helped in the past, might it not help in the future? In other words, should we reconsider whether passing an arbitrary per capita income target should be such a critical factor in aid allocation decisions?
Even more interesting to those, like RESULTS, who believe in the power of civil society to hold governments to account and for citizens to be agents of change:
While it is commonly acknowledged in the literature that there are diminishing returns on high levels of aid, and that high aid can even have harmful impacts, is there evidence or theory to suggest that no aid is better than low aid? Small amounts (under 1% of GNI) can support particular projects or initiatives within or outside government to catalyse larger change, support the development of a civil society that may prove crucial in countries where the problem is wealth inequality rather than an absolute lack of capital, or provide targeted support to the poorest.