Want to tackle global poverty? Start by cutting foreign aid

I know what you’re thinking. How on earth does that work? Surely giving money to the poorest is the quickest and most efficient way to help?

Unfortunately, this is not borne out by the evidence. In Africa for example, billions of pounds worth of aid given over the last four decades has not led to the kind of reforms needed to trigger economic progress. And this is mostly because developed countries are under the illusion that poverty can be eradicated by deploying technocratic solutions.

Here is an example, and one often cited by Professor William Easterly: eight years ago a group of Ugandan farmers’ houses and crops were burned down, their livestock were shot, and they were led off their land to be told it was no longer theirs.

Why? Because a World Bank forestry project deemed that growing forests was a better use of the land than farming. So, a technical intervention, that was believed in the long term would help these farmers, actually ended up displacing them, removing their source of income and violating their property and human rights.

Development agencies who propagate these kinds of interventions don’t actually solve anything and render the poor totally unable to hold anyone to account.

We are very lucky in that we live in relatively free societies and can hold our public and private suppliers to account. But those in developing countries cannot hold development agencies to account in the same way, and consequently, they do not receive feedback information that is vital to understanding what works and what doesn’t.

The takeaway from this case is that no matter how well-meaning the project may be, it is impossible for development agencies to work in a kind of value and politics free vacuum where property rights are ignored and still expect to make any meaningful change.

Not to mention that in some cases the provision of aid has entrenched corrupt regimes that pay little regard to the rights of their citizens and deterred other forms of investment that would otherwise spur on economic growth.

Ultimately, long-lasting economic progress occurs when countries encourage free enterprise and openness by breaking down barriers to trade such as excessive state intervention and regulation. The UK can help invigorate these efforts by lowering trade tariffs.

Look at South Korea. After the Korean war, the country’s GDP per capita was lower than that of Somalia. It is now an OECD nation and one of the 30 richest countries in the world. It has managed this, in large part, because of its embrace of free trade – and the willingness of other countries, like the UK, to trade relatively freely with it.

As a rich nation, we have a moral obligation to maintain a form of aid budget to provide emergency relief in the case of humanitarian crises. But to tackle systemic poverty in developing countries, we should take a step a back, cut our foreign aid budget and look to offer genuine aid through a rollback of protectionism and a focus on free trade.

Nerissa Chesterfield works for the Institute of Economic Affairs

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