Should America Keep Giving Billions of Dollars to Countries in Need?

By Malaka Gharib

National Public Radio

Each year, the United States sends billions of dollars to poor countries. Does it really help them grow?

The question isn’t new.

But it’s taken on renewed urgency in the Trump administration. Last month, NPR’s David Greene asked Stephen Moore, who advised Trump’s campaign on economic policy, whether he supports the idea of cutting the U.S. foreign aid budget. His response: “100 percent.”

“There’s zero evidence that any of these foreign aid programs have had any effect on development, whether it’s in the Middle East or Africa or South America,” said Moore, who is a fellow at the Heritage Foundation, a conservative think tank. “And there’s just zero evidence that any of that development aid has had any effect on raising the living standards.”

Is Moore right?

“It’s an extremely difficult question to answer,” says Rachel Glennerster, executive director of the Abdul Latif Jameel Poverty Action Lab at the Massachusetts Institute of Technology. Her group uses scientific research to test and improve programs that address the needs of the poor. “If you can break it down, you can start answering it.”

So let’s break it down.

The first challenge is to defining “development.” In a broad sense, it means economic growth — increasing the size of a country’s economy over time.

For Moore, it’s clear what leads to economic growth — and it’s not foreign aid. “All these countries have to do is cut taxes, provide private property rights and get involved in global markets,” he told NPR in a follow-up interview. He cites as evidence the Heritage Foundation’s Freedom Index, which asserts that the less control a government exerts over its economy, the higher its citizens’ incomes are.

It’s a bit more complicated than that, suggests Charles Kenny, a senior fellow at the Center for Global Development, a think tank that focuses on poverty and inequality around the world. “The short answer is, we don’t know what causes economic growth,” he says. “Development economists have gone through loads of different theories.”

Where does foreign aid go? It gets invested in roads and factories. It funds improvements in health and education, with the goal of creating a strong workforce, and ultimately toward growing a country’s economy. But still, Kenny says, “we don’t know. And if we don’t know what causes growth, what the role is for aid is hard to answer.”

Continue to full article . . .

Picture: geralt [CC0 or CC0], via Wikimedia Commons

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