Nobel Prize Winning Economist Says Foreign Aid Does More Harm Than Good

foreign aid

Angus Deaton, who was yesterday awarded the Nobel Prize for Economics, is a strong critic of foreign aid, arguing that it does more harm than good, damaging the opportunities for poor people to grow richer.

Deaton, who was awarded the prize yesterday for “his analysis of consumption, poverty, and welfare”, argues that aid actually stifles development in poorer countries and can help prop up brutal dictatorships.

In one syndicated article he wrote:

“This is most obvious in countries – mostly in Africa – where the government receives aid directly and aid flows are large relative to fiscal expenditure (often more than half the total). Such governments need no contract with their citizens, no parliament, and no tax-collection system. If they are accountable to anyone, it is to the donors; but even this fails in practice, because the donors, under pressure from their own citizens (who rightly want to help the poor), need to disburse money just as much as poor-country governments need to receive it, if not more so.”

Rather than just throwing money at developing countries, Western nations would be better off finding political solutions.

“Development is neither a financial nor a technical problem but a political problem,” he says. “And the aid industry often makes the politics worse.”

As for solutions, there are still various things richer nations can do:

“Reducing aid is one, but so is limiting the arms trade, improving rich-country trade and subsidy policies, providing technical advice that is not tied to aid, and developing better drugs for diseases that do not affect rich people.”

In one powerful example, he cites the case of Rwanda, where the despotic President Paul Kagame has become a “one of the darlings of the [aid] industry”.

“By providing health care for Rwandan mothers and children, he has become one of the darlings of the industry and a favorite recipient of aid. Essentially, he is “farming” Rwandan children, allowing more of them to live in exchange for support for his undemocratic and oppressive rule.”

His comments will be particularly embarrassing for the British government, who are committed to spending 0.7 per cent of GDP on foreign aid, a policy that Telegraph deputy editor Allister Heath has described as little more than “virtue-signalling”.

In July, Breitbart London reported how the Department for International Development “dumped” half a billion pounds worth of aid on a controversial Swiss-based charity just to meet its annual spending target.

Critics claimed the massive donation to the Global Fund to Fight AIDS, Tuberculosis and Malaria was pushed through simply so the government could “feel proud” of itself.

In an internal investigation, the Fund found that its National Malaria Control Programme in Nigeria had submitted at least 73 fictitious airline ticket claims and bought vehicles and computers at higher prices than were necessary.

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