No Foreign Aid to Developing Nations

[SpacePotato117]

The very concept of foreign aid simply never comes to exist. We never see it in any form. How would this change the economic and political scene of developing countries? Would developing counties be better of or worse off? I'm especially curious about Africa here

From what I have read and heard so far, it seems to me that foreign aid simply fosters and supports a vicious cycle of corruption in developing nations. I even saw a Crash Course video that said how the former dictator of the DR Congo, Mobutu Sese Seko, actively halted development in his country so he could receive foreign aid which he would then suck up or give to his cronies. Granted, that video glosses over Patrice Lumumba, so it may be a little flawed, but I have no reason to not believe that specific line, since they did not attempt to whitewash Mobutu.

I personally think developing countries would be better off, but to varying degrees. There would certainly be more pressure to carry out proper development just to survive and we could see nice results just from that. If things go well enough, we could perhaps even see African dictators realizing that it is better to skin 10% off a developing economy than loot 70% from a failed economy.

What do you think?

 

[A Piece of History]

I personally think developing countries would be better off, but to varying degrees. There would certainly be more pressure to carry out proper development just to survive and we could see nice results just from that.

A bunch of African countries have brought up the notion of banning second-hand Western clothing, because the importaiton of the clothing has effectively destroyed their own textile industries. The only problem is the used clothes industry in Kenya, for example, is a major employer, so banning the industry will effectively put people out of work.

How second-hand clothing donations are creating a dilemma for Kenya | Kenya | The Guardian

Just recently in Kenya, they've banned second hand clothing due to the coronavirus, but there are now calls for the ban to be made permanent.

Kenya: Textile Firms Want Kenya's Ban On Second-Hand Clothes Maintained - allAfrica.com

Another problem in banning Western-made clothes is that it would force the governments of Africa to put support towards their own textile industries, effectively blocking out foreign imports.

East Africa's ban on second-hand clothes won't save its own industry | Guardian sustainable business | The Guardian

 

[Pauh the federalist]

I may be wrong but I thought cotton was either water or soul intensive so in theory not having second hand cloths and needing to make them domesticly would take away land and water from agricultural production in areas were either food, water or desertification of soil are present issues bigger then offsetting textile industry's.

 

[Sceonn]

Aid money helped cushion to many bad governments from needed reforms.

 

[James Ricker]

A lot more political instability
Resulting in numerous Civil Wars and a rather high body count

 

[Glyndwr01]

Give a man a fish and you feed him for a day, teach him to fish and you feed him for a lifetime!
Helping out in famines is OK but carrying it on after the initial crisis is over is counter productive. Foreign Aid then encourages sloth and complacency!

 

[anotherlurker]

Give a man a fish and you feed him for a day, teach him to fish and you feed him for a lifetime!
Helping out in famines is OK but carrying it on after the initial crisis is over is counter productive. Foreign Aid then encourages sloth and complacency!

You'll just cause overfishing.

Instead teach him better farming techniques, give him access to cheap credit to buy farm tools and machines and make him aware of crops better suited to the climate he lives in. And the most important part: Stop subsidizing American and European farms to the point where First World agricultural products are cheaper than African grown produce inside Africa!

 

[Glyndwr01]

You'll just cause overfishing.

Instead teach him better farming techniques, give him access to cheap credit to buy farm tools and machines and make him aware of crops better suited to the climate he lives in. And the most important part: Stop subsidizing American and European farms to the point where First World agricultural products are cheaper than African grown produce inside Africa!

I despair of the youth of today; the quote is an allegory meaning teach them to look after themselves not rely on others!

 

[anotherlurker]

I despair of the youth of today; the quote is an allegory meaning teach them to look after themselves not rely on others!

I'm getting grey hair already, so not that young any more. I know the meaning of it, but i prefer more literal solutions to problems, less symbolism and old one liners. The people on the ground don't need to be tought that many new things, they've absorbed knowledge of many generations of people who have worked there already and know the land and what its capable of better than any outsider ever could. What they need is funding to make better use of the knowledge and to employ more helping hands. It is money that is the great hurdle to having all the nice things that make agriculture in Europe so productive, from good seeds, over spare parts for machinery and membership fee financed agricultural associations all the way to insurance against damage to crops caused by bad weather.

You can teach this alright, but it's not going to be useful to anyone if the hard cash that makes it possible to utilize the knowledge just isn't there. Making sure the cash goes towards modernization of farms instead of the numbered bank accounts of politicians is another question.

 

[Drizzt]

Aid money is something akin to Nuclear Energy: An Issue many a left-winger may admit to you in private, that it's something they wish "their side" would change course on, but wont dare say so "officially" since it's too much of an article of faith amongst them. So the concept of "no foreign aid" IMHO is a non-starter unless you start with a way early PoD.

As for why "No foreign aid" would be a big net positive for Africa: Others have already touched upon it, but the gist is this: It represents an external source of income, utterly NOT dependent on the quality of local:
- education
- infrastructure
- rule of law and enforceable contracts
- quality of life in general, which is relevent for expat investors, who no matter how greedy prefer to live in comfort themselves
Without foreign aid a ruthless kleptocractic oliagarchy would still have motivation to do some minimum amount of "good gouvernance", the proverbial running the trains thing, etc so that there is wealth created to siphon off. An external revenue stream, independent of quality of gouvernance kills that motivation and can even reverse it to keep the stream flowing. Despite the amount being smaller, in nature it's worse than the resource curse, as for resource extraction you require a certain amount of infrastructure and at least enough rule of law, that potential investors are somewhat certain they wont have it nationalized in a few years.

 

[ArtosStark]

The people on the ground don't need to be tought that many new things, they've absorbed knowledge of many generations of people who have worked there already and know the land and what its capable of better than any outsider ever could.

This is not always the case. I have worked with a local organization from Nigeria who does almost exclusively agricultural education. Knowing the land helps, as each area and soil has its own unique quirks but Agricultural Management is a science, and most of the general principles are relatively universal. They are also not as universally understood as you might think. Agricultural education is definitely a help, though it obviously has to be realized that the way you apply and exploit those basic ideas will vary with climate, location and culture.

This lack of Agronomic understanding actually applies to more developed nations as well, but the general Ag industry in those nations does have more educational resources and a more developed research and development infrastructure to help bring the average up.

 

[marathag]

Give a man a fish and you feed him for a day, teach him to fish and you feed him for a lifetime

Build a fire for a man, he's warm for the night.
Set the man on fire, he's warm the rest of his life.

For the fisherman, that's true until the big Chinese factory trawlers scoops up all the catch, and there is no more fish for anyone.

 

[Anzû]

Not all aid is created equal. On one extreme is buying cheap produce from subsidised high-tech high-infrastructure Western farms and dumping it into an economy, temporary alleviation of food issues (to those who have SOME money) but long term damage to livelihoods of farmers and potentially worse in the long run. Or, Monsanto-style seed exports where it is a short term access to planting but long term cycle of dependency and poverty.

The other extreme is aid that grants productive capacity. People have said 'teaching a man to fish' etc- this can be done with aid.

"We want something else. Those who really want to help us can give us plows, tractors, fertilizer, insecticide, watering cans, drills, dams. That is how we define food aid. Those who come with wheat, millet, corn or milk, they are not helping us"- Thomas Sankara

 

[mial42]

Aid is by no means an unalloyed positive to development... but according to Paul Collier in The Bottom Billion, it has been reasonably successful overall. For instance, he writes that:

Aid does tend to speed up the growth process. A reasonable estimate is that over the last thirty years it has added around one percentage point to the annual growth rate of the bottom billion. This does not sound like a whole lot, but then the growth rate of the bottom billion over this period has been much less than 1 percent per year-in fact, it has been zero. So adding 1 percent has made the difference between stagnation and severe cumulative decline. Without aid, cumulatively the countries of the bottom billion would have become much poorer than they are today. Aid has been a holding operation preventing things from falling apart (Collier, 100).

If he's right, then a world without aid is one in which the "Bottom Billion" (note: Collier is not talking about the developing countries in general, but rather on the very poorest and most stagnant ones, the ones that aren't converging with rich countries; he doesn't provide a full list, but North Korea, Somalia, Burundi, and the DRC are all examples of bottom billion countries, whereas China, India, Botswana, or Malaysia are not) is much, much poorer then the today. Furthermore, he notes that aid, unlike oil (or other resources), has actually increased growth rates in these countries:

Overall, despite the bureaucracy, aid has been much more successful than oil. Aid has raised growth, oil has lowered it. Yet both are financial transfers to bottom billion governments. The only difference is that aid has been handled by the aid agencies. So, unlikely as it seems, what the aid agencies have been doing has added a whole lot of value to the financial transfer. Given the bad public image of aid agencies and horror stories such as the hospital project I described above, this is hard to believe, but there it is. The projects, procedures, conditions) and suchlike have been beneficial overall, enhancing the value of the money transferred compared with just sending a check and hoping for the best (Collier, 102).

This is because aid money is not, in fact, no strings attached money; it has conditions imposed by the aid givers. In some (not all, but enough to be detectably better than nothing) cases, these strings are helpful over all.

Anyways, if Collier is right, then "Bottom Billion" countries (which I believe are the ones this thread is focusing on, due to the African focus; it's not clear whether or not the vast majority of "developing" countries, which are converging, would be affected) would be significantly worse off without aid, although he notes that aid is not enough to allow for development by itself and may be near the limits of what it can do.

 

[KarmaPolice]

Not all aid is created equal...

Which is the most critical issue of all - what is 'aid'?

Quite obviously, the giving of hard cash is 'aid'. The donation of say, capital goods, foodstuffs, medical equipment also is 'aid'. Cut-rate costs for the previous may also count as such. But how about a series of scholarships for students to access advanced education - it can be described as 'knowledge aid' in the respect it's encouraging the transmission of advanced knowledge from the developed to undeveloped. An RL example of this can be the Boxer Scholarships which helped the transmission of modern science and thought from the USA to China in the early 20th Century [okay, not exactly 'aid' as the Chinese were paying for it but a close enough example].

As some have pointed out, often the 'aid' was of dubious worth. A more easily visualised example is with any retail concern which runs on donations - in the UK called 'charity shops'. I used to work in one a while back and well, I tell you now - I guestimate that about ~80% of what was given was ultimately worthless [or near to it]. Third of donations is obvious crap, the next third is non-obvious crap or 'unsellable'. About half the remaining third ends up being sold [and thus is 'useful'.]

Why do people 'donate' crap? For some, it's a simple misunderstanding of 'what is needed' [aka 'sellable']. Others have a warped view of what is 'valuable'; I spent '18 working with an old boy who was 'convinced' that the metal on the land he owned was worth lots of money when in reality it was just about worth the scrap-dealer to pick up for free. But others just dumped the stuff willy-nilly. But why?

The answer is simple. The worth of the items was irrelevant. The 'donation' was merely to make the donor feel better. And like with foreign aid, some of the 'donations' actually cost us money.

I may be wrong but I thought cotton was either water or soul intensive so in theory not having second hand cloths and needing to make them domesticly would take away land and water from agricultural production in areas were either food, water or desertification of soil are present issues bigger then offsetting textile industry's.

Nathan's point was that the 'donations' of free clothing warps the donee economies. It's a particularly pernicious form of product 'dumping' in the respect it has no cost and how can any indigenous concern compete with that? It's even worse for food aid - partly because agriculture is a much larger % of the donee economy and it also allows rich nations to dump undesired surpluses on the unwitting - the USA and EU seriously the worst culprits here. We may have seen a variant of this during the pandemic; was all that defective PPE 'donated' by China so given because it was too crap to be sold or used at home?

As some have groped at, there's a difference between emergency aid and development aid. The latter is the most critical as poor nations generally suffer from a lack of capital to become richer. It's a traditional 'Catch 22' scenario faced by any modern ruler of a undeveloped state; that the society is too poor economically to generate enough 'profit' to fund development, yet the only way for the society to generate the profit is be developed. The level of 'sunk capital' in the advanced world is utterly staggering when you think of it; my fag packet says the 'build price' of the UK road network is perhaps $3.5 trillion [about 125% of the entire GDP]. And that's just roads - what's the cost of our railways, schools, hospitals, sewer-pipes, electricity pylons, power stations? Or the intangibles, like the accumulated knowledge and skills within the British people?

That if 'left to it's own devices', chances are most nations - however poor - would develop over time. Problem is, it's a very gradual speed due to the slowness of indigenous capital accumulation. In this, development aid is the best form to 'supercharge' it because it doesn't have to be paid back [like bank loans], doesn't rest on exploitation [squeezing your own people for more 'surplus'] and doesn't rely on the vagaries of private foreign investment.

 

[SpacePotato117]

I'll clarify here: There is no development aid/donations in this ATL. Countries can still give aid to each other in times of crisis but there will be no dumping money or free goods into developing countries.

 

[PrincessOfChina]

Give a man a fish and you feed him for a day, teach him to fish and you feed him for a lifetime!
Helping out in famines is OK but carrying it on after the initial crisis is over is counter productive. Foreign Aid then encourages sloth and complacency!

After decades of colonial exploitation and neglect they needed help, you're over simplifying

 

[KarmaPolice]

They are, but they do stumble upon a point [even if for the wrong reasons]. To whit; giving 'emergency-type' aid when strictly not needed can be in fact ultimately counter-productive. Example; donating foodstuffs when in fact what is really needed is grain silos etc to store surpluses better - for it's estimated that upto a third of food is wasted.

Space; I see that 'knowledge aid' is not verboten? How about discounted credit lines etc in the style of the Marshall Plan? Or quid pro quo deals? ['In return for those military bases etc we'll give you $X million a year and Y amount of Z...'] What about the medical aid, for example the WHO programmes which eradicated polio etc?

 

[chankljp]

Build a fire for a man, he's warm for the night.
Set the man on fire, he's warm the rest of his life.

Ok... Against my best judgement, I just couldn't resist contributing with a bit of snark of my own:

'Feed a man for free. He'll be back asking for more; Feed a man a bullet. You won't hear from him again'

(This was sarcastic, BTW, in case it wasn't clear.)

 

[Glyndwr01]

After decades of colonial exploitation and neglect they needed help, you're over simplifying

So setting up local government administration (OK I'll give you that one), water works, sewers, telegraph/phone, roads, railways etc. was exploitation?