NCPA - National Center for Policy Analysis

SUBSIDIZING INTERNATIONAL CRISES

April 25, 1997

Rather than helping prevent social catastrophes in poorer countries, as its advocates promise, foreign aid did nothing to stabilize countries which have received large amounts of it, according to Cato Institute senior fellow Doug Bandow.

Since World War II the United States has contributed more than $1 trillion in assistance to other countries says Bandow. Examining the economic and human crises in over a dozen countries, all of which had received cash assistance from the U.S., he found:

  • Some of the worst crises -- such as that in Rwanda -- have occurred in countries which received large amounts of economic aid.
  • Foreign aid has helped cause and aggravate crises in many countries by supporting regimes that have maintained disastrous policies -- in Ethiopia, Somalia, Sudan and Zaire.
  • Aid intended to promote free market reforms takes the pressure off recipient governments and tends to delay reforms.

Decades of financial transfers have not fostered economic growth in developing countries. Seventy developing states are poorer today than they were in 1980, and 43 are worse off than they were in 1970.

Source: Doug Bandow, "Foreign Aid Does Not Prevent Social Breakdown," Cato Policy Analysis No. 273, April 25, 1997, Cato Institute, 1000 Massachusetts Avenue, N.W., Washington, D.C. 20001, (202) 842-0200.

 

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