Tuesday, 11 September 2012

Debate: Thoughts on U.K Foreign Aid

Quick point I'd like to discuss in today's post is the foreign aid given out by the United Kingdom and whether it's justified. The form of aid I'm most focusing on here is 'Official Development Assistance'. It comes in many different forms, not just lump sums of cash, and it represents one of the financial flows received by the so called 'developing economies'.

In many cases I'm sure this aid is very much necessary. For example, a case I think the aid is necessary is to Ethiopia. In 2007, Ethiopia received $273 million in Official Development Assistance from the United Kingdom. In that same year, the GDP per capita in that country by PPP was $779, making Ethiopia a very poor country. They also had a Human Development Index rating of 0.414 which is a low score, bearing in mind in 2012 the United Kingdom posted a rating of 0.863. I feel in this scenario, the aid is justified because they need capital to help their economy grow, and with such little money to start out with they'd have been getting nowhere without such aid. Another fairly decent example of justified ODA is to Afghanistan who had a HDI rating of 0.352 in 2007. However, this does lead me on to the main argument I have against foreign aid. It's all well and good it being justified, but is the money going to where it needs to go?

Lots of these less economically developed countries are like that for a reason. Whether it be corrupt government, lack of resources or whatever. Donating lump sums of money to countries with a corrupt government is just a pure waste of capital. The money will be thrown about to fund lavish lifestyles for those in favour of the government with very little being invested into the people living in poverty and on expanding the economy. This is a big put off against ODA in my opinion. The money needs to be directed at precisely the places that need it, there's no use giving it to governments if the money will not be invested efficiently. Furthermore, adding on to this point is the fact that are we not partly to blame for the money not being invested wisely? It doesn't take a rocket scientist to work out that if the money is invested into the economy and the economy grows, the aid will stop. Living off the aid is an easy way out for these developing countries and they may be using that as an incentive not to expand their economies. The over-reliance on aid would soon become apparent when it stops and the developing countries start to crumble again. It seems the aid that has been throw around has placed the world in a bit of a catch 22. Keep investing money in the form of aid and the money is not all used efficiently, or stop the aid and watch countries fall further into poverty. Dilemma, in my opinion.

What's more is that it's not like our country is a perfect example. We throw all this money away to other countries without a second thought about the issues we have regarding poverty and a dwindling economy. I know that we feel there is an obligation to Commonwealth countries or an expectation that at some point in the future we'll be rewarded with great trading deals from these countries when they finally develop, but i think it has to be toned down. The money needs to be re-invested directly into our own country in times like these until we can reach the point where we can say 'Yes, our economy is running smoothly and the people are happy'. If that ever happens, who knows?

I guess I wouldn't have as much of a problem if the amount we plan to give in foreign aid didn't grow anymore, but that isn't the case.

Notice here, virtually all government departments in the United Kingdom were planned to be cut by 2014-2015 and that money basically sent out in the form of foreign aid. How that can be justified i do not know! Our economy is shrinking, taking more money out of it doesn't seem at all logical in my mind. Believe it or not, though, in 2007 we gave almost $1 billion of ODA to China and India, the two economies that will be dominating the world potentially in the coming years. Of course they do have problems, but we have problems too.

I'll tie it up there, I think my opinion on foreign aid has become very clear in this post. But that's all it is, my opinion. What do you think? Thanks for reading!

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