Debate
Is agricultural development helped or hindered by foreign aid?
A World Bank report, published in November, highlights the impact of foreign aid on economic development. Since, almost by definition, developing countries' economies are dependent upon agriculture, how aid money is allocated, what conditions are attached, and how effectively it is spent, are matters of concern to the farming community. Hence our subject for Debate: "Is agricultural development helped or hindered by foreign aid?"
Foreign aid has been highly successful in reducing poverty in countries with sound economic
management and robust government institutions. The list of countries that now meet the criteria for
using aid well has increased dramatically in the 1990s. Yet aid has fallen to its lowest point in
more than 50 years, at a time when it could be helping hundreds of millions of people escape a
hand-to-mouth existence.
Assessing Aid, Policy Research Report 7, published by the World Bank
"Aid policies, unaccountable to African producers and pastoralists, have generally bypassed
their needs in favour of expensive, large-scale projects. Africa has historically received less aid
for agriculture than any other continent, and only a fraction of it has reached rainfed
agriculture, on which the bulk of grain production depends. Most of the aid has backed irrigated,
export-oriented, elite-controlled production."
Institute for Food and Development Policy in The Myth - Scarcity
"Some 1.3bn people now have a purchasing power of less than a dollar a day. This represents
poverty deeper that most people in rich countries can even imagine. The question is how to
eliminate such dreadful destitution. Is official assistance, in particular, part of the
solution?"
Financial Times, London. November '98
"A dollar of foreign aid attracts two dollars of foreign investment because it increases
confidence in the private sector, and helps provide the public services that investors need."
Assessing Aid, Policy Research Report 7, published by the World Bank
"Most US aid works directly against the hungry. Foreign aid can only reinforce, not change,
the status quo. . . . Even emergency, or humanitarian aid, often ends up enriching American grain
companies while failing to reach the hungry, and it can dangerously undercut local food production
in the recipient country. It would be better to use our foreign aid budget for unconditional debt
relief."
Institute for Food and Development Policy
"Development assistance to agriculture and rural development directly benefits the
economies of both the developing and developed countries. For example, in the area of agricultural
research, IFPRI reports that for every dollar donors invest in agricultural research in the
developing world, their exports increase by US$4.39."
Fostering Global Well-Being, IFPRI Discussion Paper 26
"Aid can be useful, but only if it goes to people who know how to use it. This sounds like
common sense, which it is. But it is not what has been happening. As soon as a country sorts out
its economic management it finds the assistance it has been receiving shrinks. In 1996 the most
aided countries were ones with mediocre regimes. Additional aid increases growth in good economic
environments, lowers it in bad ones and leaves it unchanged in average conditions."
The Financial Times, London
"What infuriated me that day as I left, remembering the sunken eyes of young children
abandoned by the world aid effort, was that the needs of those villagers ran a poor second to
economic return. An aid project that was supposed to help the poor was excluding the poorest."
When Aid is No Help, by John Madeley, published by Intermediate Technology
