FOREIGN AID DEPENDENCY AND ITS NEGATIVE CONSEQUENCES
Foreign dependency, global power structure in which weaker countries are economically reliant on stronger countries, allowing the stronger countries to exercise significant control over the weaker countries’ economic and political behaviour. Foreign dependency generally fosters underdevelopment in the dependent country; a country’s adoption of policies tailored to the interests of a stronger country may inhibit the weaker country’s domestic growth, speed environmental destruction, or create temporary growth that precludes sustainable development and economic independence.
Why do some nations that receive foreign aid year after year never seem to improve, or move beyond the dependency phase? Unfortunately, weak judicial systems and corruption in the public and private sectors greatly impede democratic institutions and keep many potential countries from growing and developing. It’s the pre-existing condition that keeps many aid recipients from ever recovering. A country that obtains loans from the World Bank, for example The Gambia, must agree to adjust its economic structure, liberalize its economy, and increase its international financial accountability. Moreover, paying off the debt from loans often leads to balance-of-payments difficulties for the recipient, further sustaining and deepening its economic dependency.
A high proportion of foreign aid is in the form of loans, which cripple developing countries through the accumulation of debt. Many rich nations receive more in interest payments from recipient countries than they give in “aid”. Especially since the 2008 financial crash, western governments have exploited their ability to borrow money at low rates by setting up aid programmes lending to poor countries at much higher rates, minting money on the backs of the poor. This is not aid, it’s a scandal. Aid not only boosts the economies of rich countries but also promotes their foreign policy aims. It would also alleviate the sense that a country’s problem was fixed by outside intervention; local officials and citizens could claim ownership of the solution.
The latest issue linked to aid is migration. The EU, in particular, has increasingly made aid conditional on African nations curbing migration to Europe. “Those countries who… work with us will get certain treatment,” an EU official told journalists in 2016. “Those who don’t want to or are incapable will get different treatment and that will be translated via our development, trade policies.” For the EU, aid is, at best, a kind of bribe, at worst a form of blackmail. It’s not just western countries that act in this fashion. China, now a major player in the global aid industry, similarly views aid as a means of leveraging political influence. And it, too, ties much of its aid to the purchase of Chinese goods and services.
Ending or preventing aid dependency seems evident that recipient-led schemes and projects are more effective and reduce the risk of dependency. Technically speaking, some argue that aid should only ever be in the form of general government budget support rather than selective sector or project aid because it reduces donor involvement in political processes. It is also less bureaucratic, is less influenced by donor missions who need to produce and report results, and avoids the risk of uneven service provision (Moss et al., 2006). Ideologically speaking, the aid industry today is at risk of forming a novel kind of colonialism where ‘Western’ ideas of development and progress are used to influence and hold power over governments of countries receiving aid.
Another recurring suggestion is the support for both formal and informal institutions for holding governments to account, which would mitigate political power imbalances coming from modes of aid delivery. Stronger parliaments, audit bodies, civil societies and media would lessen the problem of over-powerful executives by providing effective countervailing forces. Stronger institutions could also help foster more effective spending by providing local stakeholders with a mechanism through which they can hold governments to account and thereby lessen instances of malpractice and provide a political incentive for governments to improve efficiency.
In spite of the trillions of dollars provided by foreign aid donors over the past 70 years, global economic inequality persists and countries remain underdeveloped, both economically and politically. Yet though the level of aid transfers varies from year to year, depending on budgetary crises and global need, foreign aid is not going away.