The Instigator
Jennifer9
Pro (for)
Losing
0 Points
The Contender
calculatedr1sk
Con (against)
Winning
15 Points

Foreign Aid Does More Harm Than Good

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Post Voting Period
The voting period for this debate has ended.
after 4 votes the winner is...
calculatedr1sk
Voting Style: Open Point System: 7 Point
Started: 6/25/2013 Category: Society
Updated: 3 years ago Status: Post Voting Period
Viewed: 8,453 times Debate No: 35075
Debate Rounds (4)
Comments (4)
Votes (4)

 

Jennifer9

Pro

Consider whether wealthy nations should be increasing foreign aid in a world where over 3 billion people live on under $2 a day and where the ills of underdevelopment (e.g. civil strife) can have global repercussions. The debate will also explore the poor track record of state-to-state foreign aid in increasing GDP, the support it can provide to dictators and tyrants, and the potential for freer and fairer trade to lift up developing nations.

As con, your burden will be to prove that foreign aid is beneficial to developing countries. Mine is to prove that foreign aid is not working and is detrimental to developing countries.

Foreign aid will be defined as money given to one nation from another for the purpose of economical stabilization and relief.

First round is acceptance.
calculatedr1sk

Con

I accept. As I see she is new, I'd like to extend a warm welcome to Pro, and look forward to reading her opening argument.
Debate Round No. 1
Jennifer9

Pro

Let me start with a well-known proverb, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” I think this statement really encompasses the whole problem with foreign aid. Currently, we are giving the third world the proverbial fish. The third world cannot rely on aid forever. I think this is generally agreed upon. The question is: has it been working? I submit it has not. I’m going to be breaking my argument into three different parts. Firstly, I want to outline the model for how foreign aid is supposed to work and how that has failed to occur. Secondly, I want to discuss the problems that actually occur in countries receiving aid. Lastly, in the next round, I will give a more formidable solution to the problem of inequality in the world. Before I go into any of this, I want to point out that I am referring to development aid and not emergency aid. Emergency aid focuses on relieving nations who are in crisis, whereas development aid aims as reducing poverty, rather than alleviating short-term suffering.


How Aid Has Failed
To begin, the growth model used in the IFIs today, despite frequently expressed misgivings and caveats, is the Harrod 1939-Domar 1946 model as further developed by Chenery and Strout 1966 as the Two Gap Model. The model has two important features: (A) investment requirements to achieve a given growth rate are proportional to the growth rate by a constant known as the Incremental Capital Output Ratio (ICOR). (B) Aid requirements are given by the “Financing Gap” between the investment requirements and the financing available from the sum of private financing and domestic saving. I will call the Harrod-Domar-Chenery Two Gap Model the “Financing Gap Model” for short, because its most important use is to determine financing shortfalls. (A) and (B) imply the following testable propositions: (1) aid will go into investment one for one, and (2) there will be a fixed linear relationship between growth and investment in the short run. The constant of proportionality is one over the ICOR. Essentially, aid will lead to investment, which will lead to growth, which will finally lead to a reduction of poverty. So, this is the metric upon which we should gauge the resolution on. Now, look at the way we approach poverty in the western world. We portray developing countries in the media as hopeless, disease-ridden, war-torn, corrupt waste lands. Is that any way to attract investors? In the words of economist Dambisa Moyo, “[The third world] is to development, what Mars is to NASA.” We don’t expect to see anyone moving to Mars anytime soon. We keep throwing money at the problem, but we don’t expect to see any change. These low expectations are hitching developing countries to a train destined for failure. The question becomes, over the past five decades, where the West has spent $2.3 trillion on foreign aid, have we seen meaningful, long-term economic growth? No. Have we seen a reduction of poverty? No. In fact, at least 80% of humanity lives on less than $10 a day and according to UNICEF, 22,000 children die each day due to poverty.


The Harm Aid Has Done
It doesn’t end there. Not only is foreign aid not accomplishing what it was intended to do, it is harmfully impacting developing nations. Aid does this in a cornucopia of different ways. The first is corruption. There is considerable corruption in Africa. The recently-released Transparency International Corruption Perceptions Index for 2009 finds 10 African countries in the bottom decile (with Somalia at the very bottom of the list). Of the 47 African countries reviewed, 31 scored less than 3 out of 10, “indicating that corruption is perceived as rampant.” Another data source, World Governance Indicators, reaches a similar conclusion. Africa is also the world’s leading receiver of aid money. Former Malawian President Bakili Muluzi has been accused of stealing $11 million in donor money and the World Bank agrees that foreign aid lead to corruption. The second is inflation. Inflation adds inefficiencies in the market, and makes it difficult for companies to budget or plan long-term. Inflation can act as a drag on productivity as companies are forced to shift resources away from products and services in order to focus on losses from currency inflation. The third is Dutch Disease. The curse of a resource-rich country, also known as “Dutch disease”, raises currency rates of exports in comparison to other currencies and makes the country’s other export activities uncompetitive. In other words, a poor country that is resource-rich will base their value of exports upon their need for imports. Since natural resource exports such as aid are unable to be exported or traded, they no longer carry any value. This explains how countries like Nigeria and Cameroon with its oil and minerals are still failing to grow, because they cannot capitalize on their commodities. It is also widely agreed upon that foreign aid kills off entrepreneurship. Next, foreign aid leads to civil wars and unrest. As aid money pools at the top (state-level), people are constantly fighting to overthrow their governments in order to access the vast amount of funds. It is no surprise to see the amount of wars and riots that take place within the poorest countries in our world. Even in the best possible conditions, with a corruption-free state, third world natives still do not look to their leaders. Within developed countries, we rely on our governments to provide services for us, such as education, healthcare, etc. However, in countries who receive aid money, look to the West for their social services. Instead of trying to please their people, governments are doting on the foreigners who give them the greatest amount of money. Foreign aid as essentially hitched the social services of the poorer nations on the first world. Aid is seen as permanent income, instead of a short-term solution. The third world needs to be taught to fish, not just given the fish.


I'd like to thank Con for not only accepting my topic, but also welcoming me:) Also, I apologize how long it took me to respond. Can't wait to hear back from you!


Ressources:

http://academia.edu...;
http://www.globalissues.org...
http://www.dambisamoyo.com...
https://blogs.worldbank.org...;
http://www.globalissues.org...
calculatedr1sk

Con

In her opening case, Pro has articulated some arguments which are very convincing at first glance. She has also drawn upon common wisdom which we are predisposed to intuitively accept with quotes like “give a man a fish and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.” I applaud her effectiveness as a communicator, but lest she win readers over too quickly, I ask voters to please suspend judgment until you’ve heard both our arguments in full. I believe her case rests on some misunderstandings, which I will do my best to explain.

Political Realities

The choice is often not between giving a man a proverbial fish and teaching him to fish. It is between giving him a fish, and letting him starve to death.

While corruption is indeed rife in many impoverished aid recipient countries, the crippling short-sightedness of our own democratic politics and leadership also perpetuates the problem. Bipartisan commissions and think tanks, stacked full of the greatest minds of our time, often come up with very good projects and initiatives. No matter. If there are immediate costs which the party in power must impose on the budget, which will not bear fruit until four to eight years later when the opposition may get to claim it as its own success, then that project is doomed. A politician who supports one condemns herself to being attacked in the next election as a “wasteful spender”, especially for a provision that directly benefits the lives of foreigners without directly benefitting domestic taxpayers. Conservatives are especially notorious for heartless opportunism in this regard [1] [2].

One way to avoid taking fire in the next election is to tie aid to getting something tangible for the United States in return. A very strong argument could be made that most American economic aid is not really meant to improve the prospects of the poor (if it does by coincidence, then great…), but rather is given to ensure the cooperation of foreign governments in pursuing American geopolitical agendas. In light of that, for the purposes of our debate topic I hardly consider it fair for my opponent to pretend that “economic aid” is “not working” when it is given, for example, to Pakistan for the blatant purpose of bribing a hostile nation into providing logistical support and access for one of our wars. Even the legislators who drafted a Pakistani aid bill admit that our goal was to get the Pakistanis to trust America, and they don’t even bother to feign naiveté with the idea that the billions of our dollars would actually be used to transform the lives of everyday Pakistanis [3].

For the purpose of our debate, I submit that “economic aid”, only makes sense to consider in the context of this debate if we examine cases where it seems as if a genuine effort has been made to help improve the prospects of the poor, rather than spending the money merely to serve American strategic interests. Even in the best cases of altruism, the effectiveness of aid programs is still often diluted by costly favoritism to American special interests [4]. I submit that it is in this territory where we should debate whether or not the good caused by aid outweighs the harm it causes. I will argue that it does. Even with the limitations - only a fraction of what donor nations promised to deliver, and tangled with political strings - foreign aid is beneficial. And if more funding were made available for the purpose of genuinely trying to lift people out of poverty and into prosperity, it could surely prove to work even better.

Exhibit A

Postwar Japan and Germany both received extensive foreign aid from the United States, and became Capitalistic economic powerhouses. They each had relatively high education levels, were industrialized prior to receiving aid, and were more directly under American influence postwar than the African examples we are likely to spend most of our time talking about in this debate. But even so, these examples do demonstrate that there is a case to be made for foreign aid - that there are circumstances in which it can work, and work well. Advancing from that fairly uncontroversial starting point, my argument through this debate will be to show that success isn't isolated to just those obvious examples, and that aid works in other cases as well.

I thank readers for your interest, and rest my opening statement. Back to Pro.

References:

1) http://www.washingtonpost.com...

2) http://dailycaller.com...

3) http://www.reuters.com...

4) http://www.economist.com...

Debate Round No. 2
Jennifer9

Pro

I thank my opposition for his arguments. As I see he has not countered my points, I will assume he either agrees with me or can not find a way of disproving my ideas. I'd like to refut his points then move on to the last point I will make in this debate.

Reply to Political Realities

In his first statement, con worries about letting the third world suffer without aid. I think in my next point I will have covered how we can continue helping developing nations in a mutually beneficial way, but I'd also like to point out that the third world needs to be giving a chance to fight for itself. Remember, we aren't discussing life or death situations, development aid is used to pull nations into the global market, reduce poverty, and grow and stabilize their economies. On all of these regards, aid has already failed, as I have explained in my first point.

Secondly, it seems you agree with me that the corruption aid causes is harmful. Moreover, you also have proven that aid is used as a political strategy, instead of actually trying to lift the poor out of poverty. After proving all of this your argument is then that we should increase aid. Why? It's not benefical to the first world. It's not practicle to just throw more money at the problem. We have already given trillions, even if we double that within the next decade, why should we expect to see different results? I don't think the West is willing to make that gamble. It's far to much money, especially when developped nations already have debt crisises of their owns. You also have not proven why it is beneficial. You've merely asserted it is.

Lastly, your example is flawed. In the cases you are discussing, the aid given is classed under emergency aid. U.S. assistance to Germany and Japan during the seven years following World War II. Beginning in 1949, the Marshall Plan provided $1.4 billion with the specific objective of promoting economic recovery. U.S. assistance to Germany and Japan largely consisted of food-related aid because of severe war-induced shortages and the need to provide minimum subsistence levels of nutrition. The goal was not to grow their economies, because they had funtioning economies prior to the war. This is why emergency aid worked well as recovering economies that already had a major influence in the world. You aren't about to convince people Germany needed to grow their economy before the World War II. As I have already stated, this debate isn't iun regards to emergency aid, which was used in both of these cases.



A Solution That Works
Moving on to my final point. In this contention I'd simply like to explain a few methods that work more efficiently at growing developing economies than aid. They will actually give the third world a chance to play a role in the global markets. Moreover, these methods have been knowing to increase the nation's GDP in a substainable way. They work by growing their economy from the bottom, up. Instead of pooling at the top, as foreign aid does. Leading to long-term growth and meaningful reduction of poverty. Plus, they are mutually beneficial to the givers and the receivers. So let's name a few:


Foreign direct investment (FDI)

This is a direct investment into production or business in a country by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment has many forms. Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intracompany loans." A 2011 analysis of the effects of foreign direct investment on local firms in developing and transition countries suggests that foreign investment robustly increases local productivity growth. The Commitment to Development Index ranks the "development-friendliness" of rich country investment policies. Business is booming in Africa thanks mostly to Chinese Direct Investment. Trade between the two surpassed $120 billion in 2010, and in the past two years China has given more loans to poor, mainly African countries than the World Bank. The Heritage Foundation, an American think-tank, estimates that between 2005 and 2010 about 14% of China's investment abroad found its way to sub-Saharan Africa. This has brought increased employment and prosperity to the region.

Remittances

Remittances are the transfer of money between immigrants working in developed countries back to their families in their homelands. Remittances from immigrants back to their home countries are vital, not only to the individual families, but to entire countries as well. Between 2006 and 2007, Latino-immigrants working in North America sent 36.3 billion $ back to Latin America. World Bank estimates in 2009, in nine countries remittances were equal to more than one fifth of the GDP.

Diasporas

Diasporas also work really well at industralizing the third world because it allows for networking connections between buisness men in the West to reach out to buisness men from struggling nations. This allows for the transfer of knowledge, technology and skills.

Microfinance

This is a form of financial services for micro-entrepreneurs and small businesses lacking access to banking and related services due to the high transaction costs associated with serving these client categories. The two main mechanisms for the delivery of financial services to such clients are: 1. relationship-based banking for individual entrepreneurs and small businesses; and 2. group-based models, where several entrepreneurs come together to apply for loans and other services as a group. As Marguerite Robinson describes in The Microfinance Revolution, the 1980s demonstrated that "microfinance could provide large-scale outreach profitably," and in the 1990s, "microfinance began to develop as an industry" (2001, p. 54). In the 2000s, the microfinance industry's objective is to satisfy the unmet demand on a much larger scale, and to play a role in reducing poverty. Much progress has been made in developing a viable, commercial microfinance sector in the last few decades.

Thanks once again, and I ask the readers to vote Pro. I look forward to your reply, Con.

calculatedr1sk

Con

Thank you, Pro. However, it is far too premature to be thinking you’ve earned the vote.


Pro’s Equivocation and False Claims


i) I hope readers will note Pro’s clear equivocation by claiming that the Marshall Plan is designated as “emergency aid” and is thus disqualified from this debate. Readers will recall that in round 1 she stated this definition, which I agreed to, making it binding: “Foreign aid will be defined as money given to one nation from another for the purpose of economical stabilization and relief.” That is exactly what the Marshall Plan was. She attempts to succeed at this equivocation by claiming that it was mostly emergency food aid (thus the “life or death” sort which we are excluding), and that the Plan’s goal was not to grow their economies. That is blatantly false, and completely unsupported. According to the Wikipedia entry, under the “Implementation” heading, and supported by the work of Professor Michael Hogan, “At the start of the plan these imports were mainly much-needed staples such as food and fuel, but later the purchases turned towards reconstruction needs as was originally intended. In the latter years, under pressure from the United States Congress and with the outbreak of the Korean War, an increasing amount of the aid was spent on rebuilding the militaries of Western Europe. Of the some $13 billion allotted by mid-1951, $3.4 billion had been spent on imports of raw materials and semi-manufactured products; $3.2 billion on food, feed, and fertilizer; $1.9 billion on machines, vehicles, and equipment; and $1.6 billion on fuel.”[5]


ii) “You aren't about to convince people Germany needed to grow their economy before the World War II.” I’ve made no secret of the fact that there are significant differences in the initial conditions for an aid recipient like Germany and the countries in Africa that will also be discussed in our debate, so please don’t misrepresent my position. As it happens, I have no need to resort to any misrepresentation, even if I were inclined to. Nothing in our agreed upon definitions would disqualify a country from consideration in the debate simply because the recipient had already once achieved some level of prosperity or industrialization. Therefore, Japan, as well as the countries included in the Marshall Plan, all stay in. Yet even if I decided not to use these, numerous other obvious though less well known examples are available to support my position, such as Mozambique, Korea, and Taiwan.


iii) It's not benefical to the first world. It's not practicle to just throw more money at the problem.” Pro commits two spelling errors here, but the real problems with her statement are only just beginning. Worse, she has falsely asserted that there is no benefit to donor countries for aid. Nothing could be further from the truth. Every powerful nation exerts geopolitical diplomatic influence by using two kinds of tools: “carrots” and “sticks”. Carrots, like preferred trade agreements, aid, alliances, and other frequently mutually beneficial measures, are usually far better for everyone involved than sticks, like sanctions or even war. Returning to my example, for America to pay a few billion in economic aid to buy Pakistan’s wartime cooperation is infinitely better than the trillion dollar alternative: invading them.



During the Cold War era, aid was one of the key tools of the Truman Doctrine, which eventually helped defeat the Soviet Union [6]. The world is a harsh place, and sometimes the enemy of your enemy happens to be a nasty brute. Even so, securing the support of dictators like Egypt’s Mubarak was necessary, and it paid extreme dividends to the United States: we won. It didn’t just benefit the USA. Our victory paid dividends to the countries that stood with us as well. Compare, for example, the relative situations of the North Koreans with that of South Koreans and then tell me - is the world not better off for our side having won, in part through this strategy of using aid [7]? Not all benefits can be as easily or directly measured as the proponents of things like Financing Gap Models like to pretend.


iv) My opponent says that I must have either agreed with her or been unable to counter her. False. My position is clearly stated that the net effect of foreign aid is beneficial. Pro has used the persistence of poverty and the prevalence of corruption to claim that aid has not worked and that it is in fact harmful. By using the Marshall Plan example, I demonstrated that aid has been shown to work when done properly and with sustained levels of adequate funding, which intrinsically provides a counter to her arguments.


Interpreting the Data


Finn Tarp wrote an excellent paper titled Aid Effectiveness [8] that I highly recommend as supplementary material. In his comments about the reasons for disappointing growth data in all studies, but especially fourth generation studies, he made a number of observations (pg. 16, 17) about disappointing numerical results, which I will highlight for their relevance to our discussion:


i) High complexity and openness of the growth process. The relationship of aid to growth is by no means a dollar for dollar kind of linear return. Additionally, there can be significant lag time between when a measure is implemented and when any economic impact might become apparent. For example, if schools are built, teachers brought in, and elementary-aged girls are given increased access to education, it could be 15 – 20 years before we will see a significant and measurable difference on the economy as a whole.


ii) The “endogeneity” of aid. This word refers to the phenomenon that donor money will tend to flow most generously towards the most troubled and desperate countries, while more successful countries attract less dollars once they become more self-sufficient. Therefore, the growth rate in the statistics will appear to be inversely correlated to the amount of aid countries receive, leading some to come to the wrong conclusions. This happens not because aid is hurting the country, but because the many of the countries that are hurting most are the ones to attract the most aid (at least post Cold War).


iii) Demographic implications of gains in social indicators. If child and infant mortality is decreased, devastating diseases are treated and prevented, and in general more people are surviving, then this means that the population rises, and unless economic growth rises by the same amount or more, then per capita income will necessarily fall. This is part of why I advocate so strongly for a full dose of aid, rather than half measures.


He goes on… “Collier argues that over the past 30 years aid has probably increased the annual growth rate of the poorest countries by around one percentage point and adds that: “Without aid, cumulatively the countries of the bottom billion would have become much poorer than they are today” (2007: 100). These conclusions do not deny that aid can be inefficient or that negative side-effects may arise from specific projects or relationships. Nor do they imply that we should stop learning about how aid works or how to do aid better. Here, on the contrary, much work remains to be done.”


Re: A Solution That Works


I agree that all of the strategies my opponent mentioned in this section can increase the prospects for the people of a poor nation. But readers will note that none of the solutions she mentions in this section are mutually exclusive to aid, thus rendering her arguments here a moot point. In fact if anything, aid is a helpful co-requisite, because it can improve relations enough to make direct investment possible in places weary of ”imperialism”.


I appreciate readers’ attention, and look forward to Pro’s closing argument.


References


5) http://en.wikipedia.org...


6) http://www.historylearningsite.co.uk...


7) http://www.earthweek.com...


8) http://www.un.org...

Debate Round No. 3
Jennifer9

Pro

Jennifer9 forfeited this round.
calculatedr1sk

Con

A FF?? What a shame, this had been a good debate. Since I have no points of Pro's left to address I'll make my case directly for voters why a vote for Con is justified.

S&G: Con had better spelling and grammar, since there were a number of errors Pro made throughout the debate - two of which Con even took the time to even point out.

Conduct: Because of the forfeit, conduct should automatically be awarded to Con.

Argument: Con's case was made clear by the use of examples as well as solid explanations of why aid data (at least in the short term) is confusing and sometimes contradictory. Pro did not use her round to counter any of these points, so they all stand. Therefore arguments should go to Con.

Sources: Con used 8 cited and linked sources, while Pro only 5. Although one of her links didn't work, and it was ambiguous what her round 2 links were supporting since she did not make that clear, to her credit Pro also used several citations from books, so a tie vote for this category could be justified.

Thank you for your attention, and I hope you've enjoyed the discussion.

VOTE CON!
Debate Round No. 4
4 comments have been posted on this debate. Showing 1 through 4 records.
Posted by calculatedr1sk 3 years ago
calculatedr1sk
I'm sorry to hear that, Jennifer. Get well soon.
Posted by Jennifer9 3 years ago
Jennifer9
Sorry for the forfeit! I've actually been in the hospital the past couple of days
Posted by Jennifer9 3 years ago
Jennifer9
Thanks so much! I don't mind waiting, I'd rather have to combat thoughtful and researched arguments then hastily prepared ones:) I actually have considered both, but I'm planning on a future in law.
Posted by calculatedr1sk 3 years ago
calculatedr1sk
Your argument was well worth the wait, Jennifer. Organized, articulate, researched... you've presented a strong case. It will probably take me the full 2.5 days to respond, both because I have to work and because I want to make sure I've also done my homework before posting. But in the meantime, I wanted to congratulate you on an impressive introduction. Have you ever considered a career in politics or media?
4 votes have been placed for this debate. Showing 1 through 4 records.
Vote Placed by Mikal 3 years ago
Mikal
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Reasons for voting decision: ff
Vote Placed by BrandonButterworth 3 years ago
BrandonButterworth
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Reasons for voting decision: FF
Vote Placed by TheHitchslap 3 years ago
TheHitchslap
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Reasons for voting decision: conduct due to FF sources due to several broken links by pro Arguments due to dropped arguments in final round because of FF
Vote Placed by Sargon 3 years ago
Sargon
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Reasons for voting decision: FF