Foriegn Aid: Individuals over Macro-economic Policies

In 2009, the UN Food and Agriculture Organization publicized that over one billion people globally suffered from hunger (Banerjee and Duflo 19) and economists estimate that at least one billion people live off of less than one U.S. dollar a day (Ovaska 1). With these facts present, recent scholarly debate has risen over recent years over whether foreign aid successfully works toward the removal of poverty. Two opposing viewpoints have arisen. Economists and philanthropists similar to Jeffery Sachs believe that a poverty trap confines countries with lower GDP per capita and higher rates of populations living beneath the poverty line which calls for the assistance of outside aid in order to free populations from perpetual poverty. Such economists promote foreign aid with the belief that the proper amount of foreign aid such as the implementation of schools, freshwater wells and subsidized food costs can free those stricken with poverty. However, many other economists such as Dambisa Moyo believe that foreign aid merely disrupts local economies causing more harm than benefit to developing nations. Since the 1970s, the real per capita income of Africa has dropped (Moyo 5) and similar drops have occurred in other developing nations worldwide. Foreign aid focused on reaching the specific needs of an individual more affectively fights poverty than aid projects aimed at large-scale economic progress.

The root of the economic argument comes from the debate over whether certain regions or nations currently impoverished are more prone to poverty and whether a lack of resources or a beneficial climate can lead to economic shortages. Those in favor of the idea that climates and resources determine economic fate favor an idea known as geograph...

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...p irrigation. Acumen Fund provided the research and the resources this entrepreneur needed in order to get himself out of the poverty trap and help the farmers around him with his drip irrigation innovation.

Foreign aid can destroy natural mechanisms of economic growth if not properly apportioned to the individuals with motivation and passion for expansion. When blindly given to governments and the public, aid destroys native markets and halts natural growth. NGOs, charities and governments need to take the time to meet the needs of the poor individuals ensuring that local governments have a symbiotic relationship with those they govern over and that governments do not become corrupt or prone to cause civil unrest. Aid focused on meeting the needs of those ensnared by poverty traps can exponentially initiate growth but only if done with appropriate care and caution.