Does Foreign Aid Subsidize Bad Governments?

By | April 28, 2009 at 1:54 pm

Here is the video I mentioned earlier this month.

At the TED (Technology, Entertainment, Design) conference in 2007, Andrew Mwenda, a Ugandan journalist, publisher, entrepreneur and activist made the case that foreign assistance prevents Uganda’s government from being accountable to its people.

For full disclosure, I worked for Andrew in the past as a journalist at The Daily Monitor and then at a new Ugandan magazine he started called The Independent, so I’m a little biased.

For everyone else, thoughts on how to make sure international assistance doesn’t bankroll cronyism and patronage? Boston Review author Edward Miguel thinks aid can still play an important role in preventing war and strife and in promoting development.

How should emergency aid be administered in countries like Zimbabawe or Sudan, where the government is often actively interfering? How should economic and political assistance for development be targeted to avoid patronage?

Filed under: Current Events and Issues | Tags: , , | 4 Comments »

4 Comments on “Does Foreign Aid Subsidize Bad Governments?”

  1. 1 Alex Mayyasi said at 1:23 pm on April 30th, 2009:

    Mwenda makes a powerful point – one that I find very compelling.

    My first reaction to his talk was curiosity as to what he thinks of the MCC (Millennium Challenge Corporation: mcc.gov), the project launched several years back by the Bush Administration that links aid to good governance. So far I have found no indication of his personal views on the project.

    While it seems true that wealth will be created by entrepreneurs who drive wealth creation all over the world, ignoring the government’s role in either facilitating or blocking wealth creation would be a grave mistake: states establish the rules of the game in which all economic activity takes place.

    Will the MCC reform governments according to its proposed mission? I remain ambivalent. But certainly seeing their stated protocols of requirements to gain and keep eligibility, as well as assessments of the aid’s economic rates of return and impact, gives me some hope that foreign aid will do some good and not create or subsidize corrupt, rentier states.

  2. 2 Alex Mayyasi said at 1:32 am on May 1st, 2009:

    Another source to throw out for debate: a late night find by my economic development inclined roommate.

    “Africa: Business Destination” in the Times reports:

    As the senior adviser in Africa for the International Monetary Fund (IMF), David Nellor, noted in a report last September, sub-Saharan Africa today resembles Asia in the 1980s. “The private sector is the key driver,” wrote Nellor, “and financial markets are opening up.” War is down. Democracy is up. Inflation and interest rates are in single digits. Terms of trade have improved. Crucially, said Nellor, “growth is taking off.” The IMF puts Africa’s average annual growth for 2004 to ’08 at more than 6% — better than any developed economy — and predicts the continent will buck the global recessionary trend to grow nearly 3.3% this year.

    Here wealth creation seems to be well under way. Check out how this may apply to Mwenda at http://www.time.com/time/specials/packages/article/0,28804,1884779_1884782_1884769,00.html

  3. 3 Peter Ratna said at 7:50 am on May 1st, 2009:

    Sri Lanka, for example, bombs out an otherwise self sustaining “minority” community from their homes, interns them in what it calls “welfare camps”, and reminds the international community of its “responsibility” to assist the “displaced” population. Of course, it is not the first country to use a marginalised group as “aid bait” while facing serious balance of payment or reserve currency crises.

    In fact, while the rest of the world is calling for a “ceasefire” in order to avoid a “humanitarian crises” in that country, many commentators from the “majority” community are seen urging for an intensification of the conflict because it could trigger dollar inflow in the form of “aid”.

    Our dilemma is how to discourage such practice while offering rightful humanitarian help to the affected population. Should rouge regimes see “aid bait” as successful, we would only be aggravating the suffering of “marginalised” or “minority” communities the world over. At the same time, we can not fail people who have already been subjected to gross denial of basic rights.

    What is needed is a multilateral approach to aid. Most importantly, when dealing with man made catastrophes, we need to be diligent to avoid even inadvertently encouraging rights violations that produce “aid baits” as means to securing foreign currency.

  4. 4 Lyzbeth said at 9:23 pm on May 3rd, 2011:

    Wiaklng in the presence of giants here. Cool thinking all around!

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