When It Comes To International Development Assistance, Is Money The Answer?

On the week of May 28, the Organisation for Economic Co-operation and Development (OECD) celebrated OECD Week. The event aimed to promote ‘collaboration’ and ‘co-creation’ amongst states. However, the persistence of global inequality prompts questions concerning the success of official development assistance (ODA), as defined by the OECD as ‘flows of official financing’ aiming to promote the ‘economic development and welfare of developing countries …’. Specifically, is money the answer to development? This article will first problematize ODA and identify how its flaws perpetuate harm. It will then explore suggested alternatives to ODA, hence considering what an ‘answer to development’ could entail.

Traditionally, development, or lack thereof, has been defined and measured by economic growth. However, contemporary understandings of development, as championed by scholar Amartya Sen, centre around the expansion of freedoms for individuals. ODA serves to conform to each of these perspectives, with aid often stimulating economic growth, as well as targeting social and political instability that may threaten human welfare. Considering this, it would stand to reason that ODA is an effective policy in furthering development.

However, this assessment disregards the bureaucracy inherent to ODA. That is, foreign aid does not involve giving money directly to individuals but rather involves a flow through several governmental channels, in which aid is often exploited. This is primarily evident through a consideration of the purposes of ODA, where aid is distributed and conditionality. Owing to the capitalist tenets of global society, such factors can be manipulated by donor states to further state interests, often at the expense of those in the most need.

In conjunction with this, ODA can facilitate corruption, and thus minimise development. This concept is outlined by scholar Dambisa Moyo in her book ‘Dead Aid,’ in which she argues that aid, specifically in Africa, does not necessarily reach the vulnerable but rather remains with the elite. Additionally, Moyo contends that aid encourages greater consumption and lessened domestic savings, which is ‘counterproductive’ for development.

In reflection of this, it is evident that ODA – whilst effective in some instances – is inherently flawed. Attention should thus be directed to the exploration of alternate or complementary models of aid so as to improve international development assistance. Among such alternatives include free trade, food trade, conditional cash transfers (CCT), and universal basic income (UBI). Whilst each of these strategies have shortcomings, they provide interesting frameworks for approaching aid, and reveal that money, when utilised through alternate conceptual frameworks, indeed may be the answer.

For instance, whilst free trade policies encourage the economic independence of developing states, they can facilitate the exploitation of workers. Free trade refers to the movement of goods, services, and capital between states without tariffs. In theory, the reduction of such barriers encourages increased trade between countries, thereby stimulating economies, increasing employment and contributing to development. However, free trade can also marginalise disadvantaged producers who are forced to accept low prices to survive. Such exploitation serves to perpetuate inequality and thus limit development.

Fundamentally, it is necessary that administrators of international development assistance recall the intended primary beneficiaries– people. In such an instance, the likelihood of ODA reaching those in need would be heightened, and in turn, development would increase. Nevertheless, it is important to acknowledge that the effectiveness and success of both ODA and suggested ‘alternatives’ are dependent on contextual factors. Considering this, it becomes apparent that there is no ‘simple fix’ to international development assistance. Rather, international development assistance should be distributed in a manner that considers the contexts of recipient states and communities, and in doing so, endeavours to provide effective assistance that promotes peace, stability, and equality.

Emily Forrester