University of Colorado Boulder Foreign Aid and Poverty Gayathri Gude Student ID: 106561389 Global Issues and International Affairs (IAFS 1000) S. 101 David H. Bearce Thursday, December 7, 2017 The idea of foreign aid and what that aid should be used towards has a very ambiguous scope for discussion and opportunity. The main topic at discussion regarding foreign aid is if foreign aid should be used towards poverty, and if it is, whether or not this foreign aid mitigates levels of poverty. Foreign aid should be essentially used, in various ways, to help poverty and bring the underdeveloped nations out of this long, deep, dug hole of poverty. Essentially foreign aid actually mitigates the poverty levels, to some level prior to as if there was no foreign aid. Foreign aid is an extremely effective way to bring developing nations out of poverty, mainly due to the idea that developing countries do not have the funding themselves to promote to the cause of such activities. Foreign aid is essentially a source of funding from the more developed countries that are then used for the sake of developing the third world countries, through a wide range of necessities.
Currently the three largest countries contributing to foreign aid consist of the European Union (at around 90 billion), the United States (at around 30 billion), and the United Kingdom (at around 18 billion) (Armah, 2008). This aid currently is being used as a world-wide economic development, through helping developing nations with their lack of foods, shelters, healthcare, etc. Foreign aid is not only beneficial to the country that is receiving the aid, but equally, and if not more, beneficial to the countries providing the aid.
But from a purely economic standpoint, taking the United States of America as an example, it is important for us to provide this aid to countries in need (Armah, 2008). Otherwise, these countries will not be able to fight the poverty lines themselves, causing for much of a global economic destabilization. Because many of these developing countries have natural resources that the rest of the world needs and when these countries are essentially put at positions of much destabilization, it negatively impacts the economies of each of the separate countries. For example, looking at the South American country of Venezuela, the United States (and many other large nations) depend on an estimated value of 14 trillion dollars worth of Venezuela’s natural resources. It has been a long lasting issue that this country is actually going through much struggle with a lack of food and health care, yet they have initially refused any aid. In 2017, Venezuela has reached out to the UN for medical aid, as they grow into a severe medical aid shortage. Essentially through getting this help, they are able to succeed more as a country, and countries that depend on their resources are also put at a strong economic situation (Ramsey, 2017).
That relation between the developed nations and the developing nations only strengthens through aid and help promoting to the groups of populations of poverty that need it. Many countries across the globe truly depend on these countries for natural resources, or even as a labor power for allocating businesses and offshoring techniques. Foreign aid can be fundamentally be broken down either into direct funding for set causes towards poverty (such as shelters, foods, clothing articles, etc), or as direct investments on poverty reductions. In fact, as seen in Sub-Saharan Africa, many foreign direct investments have been made for poverty reduction purposes (Calderisi, 2010). This is essentially a process of mutual benefit that abides by the saying, “You give a poor man a fish and you feed him for a day.
You teach him to fish and you give him an occupation that will feed him for a lifetime.” This really shows that through funding, the programs are created and that initial aid will last longer; it will go towards a stronger purpose, rather than the promoting of directing funding for foods and shelters, that will eventually run out and the countries will be put back into the initial levels of poverty. Essentially, with foreign aid used as a direct investment, it acts as a mutual benefit to the countries providing the aid as they are giving themselves a strong economic stance. And while this process is occuring, the developing countries are bringing communities out of poverty through a process of skills that remains constant, and when (and if) that funding fails, the skills will still remain; this essentially will stop a country from plummeting straight back into poverty. Many studies have been conducted that actually show that this idea of increasing levels of foreign aid into these foreign countries have been successful in improving public health; for example, not all funds were directly allocated to such direct actions, but to the creation of new health institutions such as: the Global Fund to FIght AIDS and the Global Alliance for Vaccines and Immunizations (Sachs, 2009). These institutions are the reason to the success behind the ais, promoting the need for more aid to actions and cures that will last past the timeframe of when foreign aid is delivered. Sub-Saharan Africa is a good example to be examined in relation to the contradiction of foreign aid. Essentially, various studies were done examining the impact of change in poverty in relation to foreign aid.
Though Africa is a country that is abundantly rich in resources, the majority of the nation is living at conditions below the average mark. Most Africans are poor, facing levels of unimaginable levels of poverty, lacking basic necessities such as: food, health care, clean sources of water, education, shelters, and electricity. Africa has been in this position for way too long, as they are now treated and seen as a “stubborn country,” with its nature when it comes to poverty (Swanson, 2015). Many believe that Africa has developed into a needy country, as the country itself has attracted far too much aid already, by many different sources of massive funding and foreign aids. Many counter arguments exist that such direct finding to such a large country, with such high levels of poverty, is a never ending flow of aid; this is ultimately only beneficial to Africa, and even only a temporary benefit because the situations of poverty are not improving themselves, the standard of living is still very low. For example, when the levels of foreign aid (into Africa) were at an all time high between the years of 1980 and 1990, the African economies were at their all time low, as studied by Bill Easterly. This study was furtherly extended by Arvind Subramanian and Raghuram Rajan, saying that the flow of foreign aid into developing nations is actually strongly correlated with a low economic growth for those countries., while the countries on the left, providing this aid, have a higher growth.
As a counter argument to groups against foreign aid, Africa’s economy may have decreased, however, in terms of their poverty levels: Africa’s poverty decreased significantly from 58% in the late 1990’s to 48.4% by the year of 2010 (Armah, 2008). It can be stated that that the only way for such a poverty-drained country to even have hope, is through these foreign aid processes. Otherwise, countries like Africa do not have the resources nor money to drive themselves out of poverty. Ultimately, any successes behind the application of foreign aid is all due to the idea of having well designed programs and plans of aid, consisting of clear goals and actions of permanency. Foreign aid is not what gets the success itself, but the created promotions, aids, and programs funded by the foreign aid. In conclusion, foreign aid is a very effective way to help the developing nations fight their increasing levels of poverty.
Through the support of the foreign aid, many programs can be further promoted to act as a permanent pillar of support for causes such as: medical aid, food, shelters, clean water, and other basic necessities for the populations of poverty within the developing nations. Citations Armah, S., & Nelson, C. (2008). Is Foreign Aid Beneficial for Sub-Saharan Africa? A panel Data Analysis.
Is Foreign Aid Beneficial for Sub-Saharan Africa? A panel Data Analysis,0-37. doi:10.1163/1872-5309_ewic_ewiccom_0231dCalderisi, R.
(2010, August 18). Why foreign aid and Africa don’t mix. Retrieved December 07, 2017, from http://www.cnn.com/2010/OPINION/08/12/africa.aid.calderisi/index.
htmlRamsey, G. (2017, April 5). Could Venezuela Accept International Humanitarian Aid to Address its Crisis? Retrieved December 07, 2017, from https://www.
wola.org/analysis/venezuela-humanitarian-crisis-aid/Sachs, J., & Ayittey, G. B.
(2009). Poverty: Can Foreign Aid Reduce Poverty? Controversies in Globalization: Contending Approaches to International Relations,0-100. doi:10.4135/9781506335407.n3Sachs, J. (2014, January 21). The Case for Aid.
Retrieved December 07, 2017, from http://foreignpolicy.com/2014/01/21/the-case-for-aid/Swanson, A. (2015, October 13). Why trying to help poor countries might actually hurt them. Retrieved December 07, 2017, from https://www.washingtonpost.com/news/wonk/wp/2015/10/13/why-trying-to-help-poor-countries-might-actually-hurt-them/?utm_term=.6bfa4a94746