Thongchai Thailand

The foreign aid business

Posted on: May 18, 2010


If you think of foreign aid as something that helps poor countries to get economic development started or to end poverty as so nobly stated by Jeffrey Sachs in The end of poverty, you will find that it has been a complete and utter failure and that if anything it has done more harm than good. That is to say, that  if you look at how foreign aid has benefited recipient countries, you find an industry that has spent trillions of dollars since its inception and has achieved nothing. As reference to support this conclusion, take a look at one of these books. They tell a story of the utter failure of foreign aid to achieve any of its stated objectives, that of economic development and poverty alleviation as described in The end of poverty.

  1. Graham Hancock, The lords of poverty
  2. Michael Maren, The road to hell
  3. Dambisa Moyo, Dead aid
  4. Bill Easterly, The white man’s burden
  5. Glenn Hubbard, The aid trap

On the other hand, if you look at how foreign aid has benefited donors you get an entirely different picture. From case studies of foreign aid one may derive certain perverse motivations that have more to do with gains to donors than the end of poverty. Some gains from foreign aid that has accrued to donors include the following:

  1. provide employment for economists, aid workers, and specialists
  2. protect agriculture markets and subsidies
  3. develop markets in recipient countries for goods and services
  4. explore and capture investment opportunities
  5. explore and capture sources for energy and raw materials
  6. export values and culture
  7. develop soft power
  8. cultivate values and practices in the recipient country to benefit the donor
  9. maintain the rich-poor divide with the rich nations as caretakers of the poor
  10. leverage international trade advantages
  11. leverage political and military advantages

The rich donor nations compete with each other for global dominance and influence and it would seem that foreign aid is one of the tools used in this game. The international aid business should therefore be judged according to these more meaningful goals because it has been shown that the attempt to evaluate them according to their stated goal of ending poverty has not led to any meaningful results.


The international aid business does not make a lot of sense if you look at it from the recipient’s point of view but it can take on new meaning and interpretation when viewed from the donor’s perspective. Foreign Aid is what’s left of colonialism.

As a 2019 footnote, consider how China is using foreign aid to invent a new model of colonization not only in Africa but also in Asia. In all such cases, China enters as a foreign aid provider for “investment” and “development” but ends up being the primary beneficiary of the partnership. A case in point is the Gwadar port in Pakistan built by China with Chinese workers and Chinese equipment and material to benefit China’s trade and economic expansion into the Indian and Arabian oceans.

Chaamjamal, Thailand

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