Ineffectiveness of foreign aid

Visualization of narrower problems
Unproductive technical aid
Wastage of development aid
Counter-productive effects of foreign aid
Negative environmental effects of foreign aid
Inappropriate provision of foreign aid

In many aid-giving countries there is a persistent suspicion that aid objectives are ill-chosen and make little impact on economic and social conditions. In the countries which receive aid, there is also a good deal of dissatisfaction with the efficiency and honesty of the aid system; for example, when aid does not reach the purpose for which it was intended there is seldom an investigatory follow-up to determine accountability.


In 1994 it was reported that the US$3 billion aid from the USA to Russia and other countries of the former USSR was not reaching those who needed it. The report claimed that too many decisions were being made at the point of origin so that the distribution at the point of receipt was poorly adjusted to the opportunities and difficulties of the local contexts.

An used factory in Tanzania, completed in 1985 by the Belgian government under the foreign aid programme in Mbagala, near Dar es Salaam, has never been provided with water, electricity and road access. The factory was designed to produce glass windows in a country where most houses do not have windows. Another Belgian financed project, the Inga II hydroelectric power station in Zaire, has also never been used.


1. Foreign aid programmes may in large part be political, to stabilize regimes friendly to donors, whether these donors are collective (such as OECD) or unilateral (such as the USA). As such, they are considered effective political programmes for the donors, who are not necessarily interested in effective development programmes in recipient lands, since effective aid runs the danger of raising the consciousness and expectations of the oppressed. This explains why so much foreign aid money goes into the pockets of the politically powerful, the local banks, the family-owned corporations, and the large-landowners, all of whom prop up the stability of regimes that impoverish their citizenry. New enterprises and new owners are feared by the traditional power-base and aid is preferred that keeps the developing countries dependent.

2. International aid is a non-solution to the Third World's problems. It has not this far taken any country from misery. In the majority of cases, public aid is used to support the local bureaucracies and policies of poverty.

3. There are ways in which aid could be made more effective, especially through better coordination of aid programmes and by targetting aid at developmental rather than commercial or political objectives.


Some aid does get stolen; some goods are lost in transit; some imports languish in warehouses and are never utilized. It would be surprising if this were not so in an endeavour where fifteen countries are transferring more than US$ 6,000 million a year of goods and services to some eighty recipient countries in an avowedly experimental attempt to stimulate growth. There is some waste in every programme, public or private; this is part of the nature of man. There are numerous accounts of waste in aid programmes, as in government domestic programmes, or in national or international corporations. While all waste is to be condemned, the question is whether the proportion of waste is too high, or so high as to invalidate the programme. Evidence suggests that an extensive amount of aid has not been dissipated through abnormal waste, mismanagement, or corruption. Occasional incidents of improper conduct in aid administrations, or of misappropriation of funds in receiving countries, do not warrant the charge that aid resources are recklessly wasted.

(F) Fuzzy exceptional problems