One of the biggest ways industrialized governments can help alleviate poverty is by giving international, or ‘foreign’ aid to developing countries. While this does not directly ease the burden of poverty in the country, it allows the local government to spend money on more direct poverty assistance efforts. Without aid from more developed countries, it is unlikely poorer governments could make any significant progress against poverty.

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When governments provide official aid to countries, it usually falls under the ‘Official Development Assistance’ category, or ODA for short. Going by the Development Assistance Committee of the OECD,

This means that to be aid classified as ODA, aid must be provided for long-term poverty alleviation AND must be, at least partially, a grant. A grant, as opposed to a loan, does NOT require repayment, which is why ODA can be so effective – the countries receiving aid do not need to go into debt and spend decades repaying industrialized countries.

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International aid can help developing countries improve their education system.

International aid has helped fuel some of the best poverty-reduction programs ever. One of the best examples of aid put to good use to combat poverty is in the health sector. Jeffrey Sachs, director of the Columbia University Earth Institute, says that aid has been used successfully in helping to promote better health all over the world. Large-scale immunization programs in Africa and other developing areas funded by international aid (and performed in conjunction with the U.N. health branch, the World Health Organization) educed deaths from diseases such as polio, measles, and diphtheria by millions. Other diseases – guinea worm, African river blindness, trachoma, and leprosy – are also being beaten back in Africa through international funding.

Development aid has also been shown to help in education. Aid-funded programs that provide children with free school uniforms and textbooks, give classes to illiterate adults, and provide money to families who send their children to school have been shown to have a very high effectiveness.

The biggest success of development aid in the last few decades, however, has probably been an event now known as the ‘Green Revolution.’ This triggered a massive increase in food crop yields, improved farming methods in poor countries across the globe, and helped developing countries such as India enlarge their economy.

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While aid has had many successes, some say that there are still many flaws in the aid system. For one thing, many argue that there is simply not enough aid given to the developing world. International aid to improve sanitation, water quality, and agriculture has been severely cut in recent years. Also, many industrialized, OECD countries are far-off from their aid goal (set by the OECD countries several years ago) – to spend 0.7% of the Gross National Income on ODA by 2015 (right now, only three countries are past the mark – Denmark, Sweden, and the Netherlands).

Some people, such as Frederik Erixon, say trade is better than aid when it comes to poverty alleviation.

Another problem with aid is that it can easily be mismanaged. Often, development aid programs are not properly coordinated among different donor nations, creating a jumble of ‘disconnected’ aid-funded activities that do not work well together. Also, a disproportionate amount of aid goes to foreign ‘consultants,’ when the money might be better spent on other activities.

Some individuals say that problems with aid do not lie so much with aid donors but rather with aid recipients. One economist, Frederik Erixon, argues that corruption in many countries causes aid money to be misspent. He also believes that ‘trade, not aid’ is the best way to get countries out of poverty – that a good approach to the economy in a developing country is better than aid. Other economists are concerned that developing nations are becoming too dependent on aid. Indeed, some African nations derive much of their national economy from aid. In Mozambique, for example, gets 60.2% of its GDP from development aid.

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[click image to expand to full size] - This graph shows the percentage of the GNI given as development aid by the OECD countries. Denmark gave the greatest percentage (0.84%), and Italy gave the least (0.15%).

The main contributors of development aid are the OECD countries. In 2004, they gave more than $78 billion dollars. The United States was the largest donor – giving almost $19 billion, but the European Union’s aid totaled more than $42 billion. Also, when the amount of aid is compared to the total Gross National Income of a country, the U.S. comes in next to last (only Italy is behind) among the OECD countries – giving only 0.16% of its GNI. This is far behind the industrialized nation’s target of 0.7% of the GNI by 2015.

The European Union, on the other hand, has a much higher percentage of GNI dedicated to aid. The average GNI percentage for aid in EU nations is 0.36, more than twice that of the U.S. Some EU countries – Netherlands, Sweden, Denmark, Luxembourg, and Norway – have already 0.7% mark. Norway, the country with the highest percentage of GNI allotted for poverty, gives 0.84% of its GNI.

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BBC News: Why Aid Does Work

BBC News: Why Aid Doesn't Work

Dugger, Celia. "Discerning a New Course For the World's Donor Nations." The New York Times. 18 April 2005, international ed.

Gilbert, Geoffry. World Poverty. Santa Barbara: ABC-CLIO 2004

Gray, Andrew. Reuters: Definat G8 agree major aid boost for Africa. 8 July 2005.

The Green Revolution

Is Aid Working for the Poor?

MAKEPOVERTYHISTORY: What We Want

Making Aid Work

OECD: Preliminary Aid by Donor for 2004

Traub, James. "Freedom From Want." The New York Times Magazine. 13 February 2005: 11-12.

Wikipedia: Development Aid

Wikipedia: The Green Revolution

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