NCPA - National Center for Policy Analysis

Foreign Aid Must be Results-Oriented

February 15, 2002

Under a plan being promoted by President Bush, nations receiving foreign aid will in future be required to assume greater responsibility for their own economic decisions. He wants to see proof of positive results, experts say that often in the past the billions lavished on developing countries -- even purely humanitarian aid -- have simply gone into the pockets of recipient-country politicians and bureaucrats. Worse still, assistance has destabilized the economies of those countries and left them even poorer.

What new directions would a results-oriented foreign assistance policy entail?

  • Economic assistance must first focus on basic security and the rule of law -- helping fight crime and promote a functioning legal system, experts recommend.
  • Steps to encourage greater productivity would include seeing that females are educated and efforts made to eradicate debilitating diseases.
  • Economic reforms strengthening private enterprise and emphasizing open markets are crucial.
  • Removing regulatory barriers to entrepreneurship are just as vital.

What is no longer acceptable is continuing on the treadmill of past policies.

According to a study by Brett Schaefer of the Heritage Foundation, nearly two-thirds of the 85 countries receiving international development loans between 1980 and 1999 derived little or no benefit in terms of per capita wealth.

Source: Judy Shelton, "More Aid? Sounds Great. But Wait...," Wall Street Journal, February 15, 2002.

 

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