Aid & Development

What happens in the developing world is intimately connected to what happens in the developed world. We live in a globalised world in which the decisions of consumers, governments and corporations determine who wins and who loses in the global economy.

Unfortunately, addressing poverty is not just as simple as sending money overseas. The causes of poverty are fundamentally economic and political and they are most often related to issues such as:

• rights to land and other natural resources
• global trade structures
• concentration of economic power
• corrupt and oppressive governments
• conflict and violence
• oppression of minorities

Many of these issues overlap, and all of them are shaped by forces both within poor countries and without. However there is little doubt that there is a structural relationship between poverty in large regions of Africa, Latin America, Asia and the Pacific, and wealth in North America, Europe, North East Asia and Australasia. The core elements of this relationship are:

• the demand for massive quantities of cheap commodities (food, minerals and fibres) to supply industrialised consumer economies
• the need for cheap labour in primary production and low-end manufacturing to ensure cheap consumer goods
• the political dominance of the West in all key international structures: the Word Trade Organisation, the International Monetary Fund, the World Bank and the United Nations Security Council
• the dominance of most key sectors of the global economy by enormous multinational corporations based in the West
• the control of global finance by Western governments and corporations, and the destabilising and opportunistic role of financial markets
• the reliance of many corrupt and oppressive governments on military and financial support coming from the West

The Role of Aid

Foreign aid takes two forms:

1. aid from international institutions (such as the World Bank or UN) and the governments of wealthy countries - this is called official development assistance (ODA) and makes up over 90% of international aid.
2. aid from non-profit non-government organisations (NGOs), such as Oxfam, TEAR and World Vision, which is sourced through private donations. NGOs can also be involved in delivering official development assistance (ODA).

Delivered well, international aid can play an important role in alleviating the suffering of the poorest and most vulnerable in the world, and can help in improving the longer term life prospects of poor communities.

However, aid makes up a fraction of international finance: in 2008 total ODA from all countries was around US $134 billion - compare this with the fact that in the same year the USA alone implemented a US $500 billion economic stimulus package and the UK a £700 billion rescue package. And given that poverty is primarily caused by economic and political structures, aid can never be a solution to poverty.

Unfortunately, aid can also sometimes be part of the problem. ODA from international institutions and governments has often been used to reinforce existing global economic structures, rather than to meet the needs of the poor and vulnerable. Poorly implemented aid projects can also have unintended negative impacts upon local communities.

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