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Debate: U.S. aid to Africa

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Should the United States Increase Foreign Aid to Africa in Order to Help Meet the Millennium Development Goals?

Background and context

The Millennium Development Goals (MDGs) are eight goals that the United Nation member states have agreed to try to achieve by 2015. It is currently estimated that $40-$50 billion a year is needed in order to achieve all Millennium Goals by 2015. The United States lags behind comparatively situated nations in granting foreign aid to Africa, generating sharp criticism from other UN member states and also from political groups within the United States. The Bush administration expresses concern over the failure of aid to achieve economic growth, reduce poverty or reduce inequality. The United States seems to be moving toward a position of reducing aid to corrupt countries and concentrating aid on less corrupt countries. The approach has been discussed in other donor countries, such as in Europe and Japan, but has not yet been applied. The United States argues that large amounts of development aid is lost to corruption, and that such aid in corrupt countries actually strengthens the corrupt bureaucratic structure already in place. On March 14, 2002, President Bush announced that “we will reward nations that have more open markets and sustainable budget policies, nations where people can start and operate a small business without running the gauntlets of bureaucracy and bribery.” The core problem in determining the proper allocation of foreign aid is how to strike a balance between the effectiveness of US tax dollars and respect for the world effort to reach the MDGs. The main debate surrounding whether to increase US aid to Africa stems from the question of where this balance is to be struck.

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Argument #1

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Yes

The United States currently spends $420 billion a year on defense. In contrast, it is estimated that only $40-$50 billion a year is needed to achieve all Millennium Goals by 2015. Increasing foreign aid by the United States would not disrupt the American economy, nor would it cause an undue burden on taxpayers

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No

But that money is better spent on the military and the other things that it is invested in than being spent on aid. In fact, he US government is moving towards creating a new command for Africa which will enhance the effectiveness of aid and other US initiatives, and is a much better use of that money.

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Argument #2

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Yes

Major findings by respected analyst Paul Moseley conclude that it is impossible to establish any significant correlation between aid and growth rate of GNP in developing countries. Although there is sometimes leakage of aid into unproductive expenditures, at the micro level all donor agencies generally report the success of their projects. This is known as the “micro-macro paradox.” The United States should recognize this paradox and not cut its aid allocation to the most needy of countries

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No

During the Cold War Africa received $450 billion in aid, and its GDP actually declined by 0.59% per year.

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Argument #3

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Yes

The emergent US policy of selective assistance is too project specific and will cause economies to become counter-productively dependent on foreign aid. The relative abundance of aid in comparison to the profits of work might lead to a conduction of economic signals such as profit, supply and demand, and weaken the countries’ economic system.

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No

The current US policy of selective aid assistance is financially responsible and logical. Recent research conducted by Burnside and Dollar found that the impact of aid on growth is positive in countries with a good political environment for making policy. The United States should focus on identifying institutional and policy constraints that reduce the impact of aid on growth instead of simply increasing aid to help meet the MDG. Aid should be allocated in countries where it works best and reduced in countries with poor policies.

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Argument #4

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Yes

It is a mistake to argue that free trade offers a cure for what ails poor African countries. International aid has done an immense amount of good in other areas such as in eliminating smallpox in the 1970’s. Such success stories over the last fifty years have involved both trade and aid, not dependence on one over the other

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No

1. What Africa needs is a hand-up, not a hand-out. Aid is ineffective because it tends to finance consumption rather than investment. What the continent really needs is free trade to hoist itself out of poverty. Expanded trade offers significant hope for African economic progress. Since World War II, much of East Asia appears to have used trade, not aid, to climb out of poverty. 2. Development is homegrown. The key to eradicating poverty and inequality in Africa is focusing on private level, not public level, development. Promoting a better climate for doing business in the private sector expands the opportunity for people to make money honestly, thereby reducing corruption. As it has elsewhere in history, economic development in Africa will depend on the success of private-sector entrepreneurs and social entrepreneurs. Development is homegrown.

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Argument #5

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Yes

Although it is true that economic development is almost always more successful in countries with good governance, some researches hold that there is still a positive relationship between aid and sustainable economic growth regardless of governance structure. The fact that better-run countries tend to grow more quickly does not warrant the conclusion that poorer-run countries should receive less aid.

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No

Increasing aid to Africa will only entrench corrupt regimes. In the 1980’s, $100 million in famine aid to Ethiopia merely bolstered the country’s Stalinist regime and prolonged civil war and famine

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Argument #6

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Yes

Giving aid money to corrupt governments allows officials in those countries to use that money to hide their corruption, to steal it, or to use it for personal projects

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No

1. Responsible governments should be given more aid and more responsibility and ownership for the projects in their countries, while the worst governments should be bypassed and limited to emergency relief only. This strategy will create strong incentives for accountable government policies 2. Foreign aid has a negative impact on the democratic stance of developing countries and on economic growth, by reducing investment and increasing government consumption.

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