By Julia Filan

The old saying goes “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”. This saying is brought to mind when thinking about the crisis of foreign aid dependency in developing countries. Aid is provided with good intentions but often charities and NGOs don’t realize its harmful effect. It is imperative to restructure foreign aid to foster effective sustainable development.

This concept is best described in the documentary Poverty Inc. After the Rwandan genocide, a church in Atlanta started an egg collection in their community and sent them to a small village near Kigali. This seemed like a great idea to those on the giving side. However, there was a man in the town who had successfully invested and started an egg business a few years earlier. When the eggs arrived, he couldn’t compete with free goods and was put out of business. After about a year, the church began donating to another cause, so the community was no longer receiving free eggs and their local egg business was no longer operating as well.[1] In the long run, there was a negative effect on the community.

Many charitable aid programs result in a similar situation where people may benefit in the short-term but in the long-term it drives local merchants out of business, creating more poverty and leaving communities with a further lack of resources. This type of aid can have a very negative effect on the developing country’s economy. No economy can develop on ‘giveaways’. It also gives the people of the country a dependence mentality.

One solution could be to partner with local businesses instead of just giving money. Partners Worldwide is a leading NGO in this practice. It goes into developing countries and trains local people on how to run a small enterprise. In some cases, they provide investment to get businesses started. They also help develop a business network on a local and global scale.[2] They have made an impressive impact, working with 77 communities in 32 countries, creating and sustaining over 200,000 jobs and lifting people out of poverty.[3] This model has proven to be much more effective than just giving away goods. More NGOs switching to this model could greatly help economic development.

Another key factor to improve aid programs is communication between the donor and the recipient. In the Rwanda example from Poverty Inc, little communication was done to see if the donor group was sending eggs to a village that needed them. There are situations where donations would not harm the local economy because they are not consumed locally.[4] With more research and communication with aid recipients, it can be distributed more effectively. A success story that demonstrates this occurred in Botswana in the 1960s. The government prioritized different areas and allocated donor funding to them. They ensured the projects would last once aid diminished.[5] By the recipients of the aid having some control, Botswana was able to reduce their aid dependency from 30% to 2% in 20 years.[6] There was similar success in Taiwan. They depended heavily on aid from the United States, but the government controlled the spending. They chose to invest in industrialization, particularly manufacturing, transportation, and communications. Later, they were able to expand exports and improve their trade balance. This boosted the economy and brought many people out of poverty.[7] Eventually, the US was able to stop aid completely and today, Taiwan has a GDP comparable to Germany’s.[8] By providing aid recipients power in the process, achieving sustainable growth is more likely than aid dependency.

There are many cases where aid may be doing more harm than good, despite its intentions. However, it is evident that countries and people can escape aid dependency by restructuring how foreign aid is provided.  In so doing, the prospects for more effective sustainable development and reducing poverty can be increased.

Julia Filan is a freshman at The College of William and Mary. She is majoring in International Relations with a double minor in French and Psychology. She is particularly interested in sustainable development.

Works Cited

Caraballo-Cueto, José. “What’s Wrong With ‘Poverty, Inc.’? A Critical Review.” Huffington Post (blog), September 20, 2017. https://www.huffingtonpost.com/entry/whats-wrong-with-poverty-inc-a-critical-review_us_59c1b313e4b0c3e70e7428cc.

Chang, David W. “U.S. Aid and Economic Progress in Taiwan.” Asian Survey 5, no. 3 (1965): 152–60. https://doi.org/10.2307/2642405.

Collins, Kari. “Real Aid: Ending Aid Dependency,” n.d., 64.

“Global Indicators and Annual Impacts 2017-2018.” Partners WorldWide, 2018 2017.

Miller, Michael Matheson. Poverty, Inc. Passion River Films, 2016.

Runde, Daniel. “Taiwan Is A Model Of Freedom And Prosperity.” Accessed December 17, 2018. https://www.forbes.com/sites/danielrunde/2015/05/26/taiwan-development-model-freedom-prosperity/#1d430763670c.

Stanford, Victoria. “Aid Dependency: The Damage of Donation.” This Week in Global Health. Accessed December 17, 2018. https://www.twigh.org/twigh-blog-archives/2015/7/31/aid-dependency-the-damage-of-donation.

“The Approach.” Partners Worldwide (blog). Accessed December 16, 2018. https://www.partnersworldwide.org/our-work/the-approach/.

[1] Michael Matheson Miller, Poverty, Inc. (Passion River Films, 2016).

[2] “The Approach,” Partners Worldwide, accessed December 8, 2018, https://www.partnersworldwide.org/our-work/the-approach/.

[3] “Global Indicators and Annual Impacts 2017-2018” (Partners WorldWide, 2018 2017).

[4] José Caraballo-Cueto, “What’s Wrong With ‘Poverty, Inc.’? A Critical Review,” Huffington Post (blog), September 20, 2017, https://www.huffingtonpost.com/entry/whats-wrong-with-poverty-inc-a-critical-review_us_59c1b313e4b0c3e70e7428cc.

[5] Victoria Stanford, “Aid Dependency: The Damage of Donation,” This Week in Global Health, accessed December 8, 2018, https://www.twigh.org/twigh-blog-archives/2015/7/31/aid-dependency-the-damage-of-donation.

[6] Kari Collins, “Real Aid: Ending Aid Dependency,” n.d., 64.

[7] David W. Chang, “U.S. Aid and Economic Progress in Taiwan,” Asian Survey 5, no. 3 (1965): 152–60, https://doi.org/10.2307/2642405.

[8] Daniel Runde, “Taiwan Is A Model Of Freedom And Prosperity,” accessed December 17, 2018, https://www.forbes.com/sites/danielrunde/2015/05/26/taiwan-development-model-freedom-prosperity/#1d430763670c.