AID And Global

Development

The Ethics and Ethical Dilemmas of Aid

Questions

1. Why Should Nations Provide Aid to Other Nations?

2. What are the Ethical Dilemmas Associated with Aid?
3. What is the History Behind Aid?
4. What is the Debt Crisis of 1980-2000?
5. How is Aid Being Delivered Today?
6. What are the different kinds of aid?
Kinds of Aid
1. Bilateral: When one country gives aid to another. E.g.,
USAID gives money to Ethiopia. Tied aid = aid that
comes in the form of goods and services tied to using
donor country’s businesses or gov’t (e.g., military).
2. Multilateral : When many countries give aid through an
international organization (WB, IMF, UN). Conditional
aid = recipient country receives a loan so long as it meets
certain financial, human rights, and efficiency
conditions
3. Private/Public Partnerships: When a private foundation
gives aid to a country. Aid targets specific sectors,
especially healthcare (as in Melinda and Bill Gates and
Ethiopia).
Purposes of Aid
1. Emergency Relief Aid. Not aimed at development but at
relieving suffering caused by disasters, natural or human
2. Military Security. Not normally aimed at development
3. Loans: Aimed at development or not (e.g., enabling even
affluent countries (Greece in 2015) not to default.
4. Foreign Investments in infrastructure (China Belt and
Road Iniative)
5. Direct Development Aid targeting poverty and related
non-economic sectors (health, education, ecology, etc.)
Why Should a Nation
Provide Aid?
1. National Self-interest
2. Beneficence (prudence): to relieve suffering for its own
sake. (weak utilitarian justification)
3. Duty 1: to fulfill our human rights duties (unlike 2, non-
compliance = injustice)
4. Duty 2: to fulfill our social contract duties, such as
compenating for past and present exploitation, colonial
appropriation of wealth, etc.)
 History Behind Aid
1.Great Depression (1929) = global crisis. Global protectionism deepens
crisis, leads to domestic instability and fuels rise of fascism in Germany,
Japan. WWII
2.Bretton Woods Conference (1944). To avoid global economic crisis by
stabilizing currencies AND to rebuild war-torn Europe as wall against
Communist (Soviet) threat. J.M. Keynes: Gov’t economic regulation key
The birth of today’s Global Economic Multilaterals: the World Bank, the
International Monetary Fund, and the World Trade Organization.
3. Cold War and De-colonization (1948-1989) The real beginning of aid
to poor newly independent colonies, mainly for geopolitical (national self-
interest) purposes to stop communism.
 Con’t
4. 1967-81 MacNamara leadership of WB: lending
increases; focus on combatting global Poverty
5. Debt Crisis: (1980s---2000). Developing countries become
indebted when US raises interest rates. IMF/WB bailout
loans impose disasterous structural adjustment policies
(SAPS). Aid to poor countries = 1/10 of what poor countries
pay back to WB/IMF to service their bailout loans.
Development stops and global poverty rises 20%
6. 1996---Heavily Indebted Poor Countries Initiative (HIPC)
cancels debt of over 30 poor countries. New loan terms make
it easier for poor countries to develop
 Con’t
7. Washington Consensus and Neo-Liberal economic theory:
Development is best promoted through private business investment and
global trade. Government-funded services and regulation must be cut
back to allow businesses to grow. Anti-Keynes: Govt is the problem;
market is the solution. Tax breaks to investors = job growth
8.UN Millennium Goals (1996-2015): Nations commit to reduce number
of people living below extreme poverty line by 50% (goal not achieved
but progress is made, especially in Southeast Asia)
9. New Development Initiatives: Governments outside of Development
Assistance Committee (DAC) of Organization for Economic Cooperation
and Development (OECD)---China, India, and Middle-Eastern countries
---provide aid for large-scale infrastructure (China Road and Belt
initiative) and refugee assistance (Saudi Arabia, etc.)
 ● Jeffrey Sachs: To solve poverty,
need infusion of basic income
to generate family savings,

Argument For Aid enabling education, investment

● Bill Gates: The Global Burden

of Disease as primary cause of
poverty requires massive aid in
healthcare, medicine, drugs
 Dilemmas:
1. It doesn’t work.
2. It makes poor countries dependent on rich countries
3. It doesn’t incentivize poor countries to develop on their
own
4. It props up corrupt governments and let’s dictators
divert more domestic tax revenue to their police and
military
5. It’s a diversion detracting from what’s really going on:
the massive flow of $5T to rich countries from poor
countries with only $2-3T to poor countries from rich
countries
Against Aid:

William Easterly: Gap between tax-payer and

recipient: We never know how our money will be spent;
therefore we have no incentive to provide aid.

Dambisa Moyo: What’s the point of providing income

to poor people to send their kids to school if there are
no jobs waiting for them? Better to encourage private
investment and job creation [neo-liberal, market-based
solution]