It is hard for people living in the United States and other advanced countries to be conscious to one of the biggest problems the world faces today, economic inequality. Those living in advanced countries live such different lives than those living in third world countries who have to struggle to survive every day. Today, the richest 1% have more wealth than the rest of the world’s population combined (Hickel). This is a staggering fact, especially because most of the United States population would be part of the top 1%. To address this problem, the U.S. and other countries send money and other resources to countries in need in the form of foreign aid. Foreign aid is defined as “money, food, or other resources given or lent by one country to another” (Rutsch). Sending aid to countries in need seems like the right thing to do, and it is especially for third world countries that experience natural disasters; however, current U.S. foreign aid has created many problems in countries that do not need more problems than they already have. Although aid should not be abolished because there is a need for aid, U.S. foreign aid needs to be changed because in the long run it only creates more economic, social, and political instability in already unstable countries. 

Foreign aid all started after World War II when Europe was left shambles. Millions of people had been killed in the war and industrial and residential areas laid in ruins. In 1947, President Harry Truman appointed George Marshall as Secretary of State and was put to the challenge on how to revive Europe. In only a few months, Marshall proposed what was later called the Marshall Plan which was imposed by the United States in order to rebuild the economies of Europe. The United States spent nearly $13 billion dollars ($130 billion dollars today with inflation taken into account) on the plan (History of the Marshall Plan). The Marshall Plan became the first example of U.S. foreign aid and laid the ground works for U.S. foreign aid policy. In the 1950’s, U.S. aid switched from economic to military assistance and had a much different purpose due to the Cold War. The U.S. used military aid as a way to protect smaller countries from Communist influence and to promote assistance with the fight against Communism.  Since the Cold War, there has been an increase in U.S. foreign aid as well as an increase in different types of aid. The government is not the only entity that provides aid too. Non-governmental organizations (NGO’s) which are nonprofit organizations who are funded by donations and ran by volunteers. NGO’s are other U.S. foreign aid donors that contrast with governmental aid in that they take the “politics” out of the aid, but create similar programs to the government in recipient countries. These donators have five major types of foreign aid that the U.S. implements; bilateral aid, multilateral aid, tied aid, project aid, and military aid. In 2015 the U.S. spent a total of $35 billion on foreign aid which only takes up about 1% of the total budget (Rutsch). 

Even though foreign aid makes up a small percent of the total U.S. budget, it is still very important to not only the countries receiving aid but also to the U.S. that the money is well spent and is successful. But with so many different aid programs and recipients of aid, how can aid be classified as successful? The debate on whether foreign aid is successful or unsuccessful has a lot to do with the intentions of foreign aid compared to the actual results of aid. Although the intentions of aid are good in that it is intended to help countries in need, the effects the aid has on the recipient countries should ultimately decide whether the aid was successful or not. This is much harder than it sounds, however. Academic studies about the impact of aid falls on a wide range of views and is difficult to measure because each foreign aid program has a different time period to have impact which makes judging the effects challenging. Since it is hard to classify aid programs as successful or not, it has led to great debate on foreign aid and its effectiveness. However, the fact is that foreign aid alone has never turned a poor country into a rich one and most foreign aid does not fully achieve what it is intended for (Glassman). 

One of the biggest problems with the current system of U.S. foreign aid is that it creates dependency which in the long run creates economic instability. This dependency has not only caused economic problems, but also political and social problems in already hurting countries. Unlike loans, which need to be paid back, aid does not have to be repaid which is why it is not utilized efficiently. When aid becomes a long-term strategy, aid creates dependency (Lea). Food aid is one example of how aid can lead to dependency. When long-term food aid is given to a country, it creates agricultural stagflation which means agriculture in the recipient countries slows down considerably. This occurs because the price of the food that is donated is much cheaper so the demand for locally grown food declines. This also leads to a decrease in food production which will be talked about later in the paper. An example of this problem can be seen in Haiti, where they have been “dependent on cheap US imports for over 80% of grain stocks since post aid era,” (Lea). Another example of this problem can be seen in the Philippines where the dependency on U.S. food aid has created an over reliance on cash crops. 

Food dependency is not the only dependency problem as a result of foreign aid. Another type of dependency called political dependency is a result of foreign aid where the U.S. becomes more of a governing force in the recipient country and therefore reduces accountability for those especially in power in the countries. This hinders internal-development and long term growth in the country because when the U.S. stops providing aid, the country does not know how to govern itself and has not made developments to keep the country self-sustaining. This is a problem in countries such as the Democratic Republic of Congo or Zimbabwe where the need for aid comes from political upheaval because the people are forced to be more reliant on donors even if the donor’s funds and ideals are not in line with what the people need or want (Lea). The public may not agree with what the U.S. believes is the best action for the country because the actions may not line with their cultural, religious, or social values. This dependency, which can be created by any type of aid, creates what is known as a dependency cycle which is very hard to break and is a big reason why many countries do not see economic or political improvements after aid is given. 

Dependency is not the only problem that is caused by U.S. foreign aid. Over the past ten years, the U.S. intentions for providing aid has shifted which has resulted in economic instability in recipient countries. Recently aid has been used as a way to influence countries rather than to actually help them and as a result benefit the U.S. more than the countries in need. According to the UN Conference for Trade and Development, for every dollar spent on aid for foreign countries, we receive $7-$10 back through trade, debt repayments, etc. The Conference also found that net transfer of wealth is $200 billion from poor to rich countries. This shows that the U.S. is benefiting more than some of the recipient countries which is not what the intended purpose of aid is. One of the best examples of a country that was given aid as a way to be influenced is Afghanistan. After the U.S. invaded Afghanistan, it showed that the people there, especially the women, were being oppressed and needed help. Before 2001, Afghanistan was known as the “hermit kingdom” which meant they had no outside influence and many people believed it would stay that way until the U.S. invaded. After 2001, U.S. aid agencies, as well as other countries, flooded the country (Tedx). Maliha Chisti, the speaker of the TEDtalk, was an aid worker and when she got to Afghanistan she said they were in charge of almost every aspect of the people’s lives. Within just a few months, the U.S. began influencing the country to become more capitalistic. Chisti says that Afghanistan became a “blank slate” and that the U.S. and other donors began pouring their ideals and goals for the country, with no real intentions of actually helping the people there. The U.S. and other countries wrote policies, restructured the government, influenced the security sector, and even planned the economy for the next twelve years, all without domestic consent. Foreign aid to Afghanistan, although one of the biggest recipients of U.S. aid, is considered a complete failure. Today there is still no private sector in the Afghan economy. Many Afghans also believe the bad politicians, unclear tax rules, and other policies implemented have made it more difficult for businesses to do well than when the Taliban was in control.

When the U.S. sends food aid to poor countries, not only is there a high possibility the receiving country will become dependent on the food, but it also lowers the production of food. Food aid increases inflation because it increases the supply of food. Since the supply of food increases, the prices of food decreases. This leads to a decrease in the production of food which is very detrimental to countries that are trying to get an economic footing, and especially those experiencing famines. An example of this was the US ‘Food For Peace’ program in the 1950’s and 60’s to get rid of huge farm surpluses. The US dumped massive amounts of wheat in India which severely hurt their agricultural market which led to many farmers going bankrupt (Leah). After natural disasters and other catastrophes, food aid may help people in the short-term, but in the long run it has shown to only create more economic problems. Not only does the abundance of food decrease local production, it also decreases the incentive for local farmers to continue to produce since they cannot compete with free food. This problem has been seen with other types of humanitarian aid other than food where local businesses have no incentives and cannot compete with the increasing supply of resources and money being poured in which leads to unsustainability within the country when there is no more aid.

The reasons why a country needs aid varies from country to country. However, a major reason for instability in third world countries is corrupt leaders, which foreign aid only feeds to their power.  In countries that receive aid that are experiencing conflicts, such as Africa and the Congo region, the people may get the aid, but armed groups who are the reason for the violence and corruption take the resources. They then sell them to spend on more ammunition and weapons. This leads to more corruption and therefore more need for aid, thus beginning a vicious cycle that only helps the groups who are the source of the problem in the first place. Not only does foreign aid lead to more corruption in countries with armed conflicts, but also countries that are politically corrupt.  Officials who are in power of recipient countries become “dis-enfranchised” in that they only need to cater for donors and don’t need to worry about changing policies (Leah). This not only keeps the corrupt in power, but it makes it almost impossible for the lives of the people who are actually struggling to survive to improve because the officials do not have to listen to the needs of their people, only the needs of the donors. This also leads to an increase in inequality as those who politically abuse aid act as authoritarians, keeping most of the people in poverty. This disconnect between those in power and those in poverty can become so extreme that it can lead to civil wars and violence.

Many economists agree that the biggest problem with foreign aid is that it is not specific enough for the country it is intended for. Jeffrey Sachs, a very famous economist who focuses on improving foreign aid, came up with a “big idea” or aid package that was intended to help many different ten poor African villages. This package was called the Millennium Villages Project. It was an extremely experimental form of aid which gave the countries money and infrastructure to jump start them into self-sustainability. However, his project changed the ecosystem of the villages. Money, food, and clinics that were built in the villages attracted people from all over. This led to a spike in crime, overpopulation, and disease. (Wamboye).  The project was a huge failure and showed that the same aid program does not work in more than one place. There have been many other experimental aid programs intended to help many different countries but none of them, like the Millennium Villages Project, have been successful. This can also be related to charitable aid. Charitable aid which comes in large grants of money has never lifted people out of poverty (Hubbard).

Although it is apparent that there are many problems with foreign aid, many people believe aid does not need to be changed because it is successful. One of the biggest reasons for some to believe this is because aid portrayed on the media is usually immediate aid that is given to a country that experiences a natural disaster. Although aid may be helpful at first, when aid becomes a long-term strategy, many problems arise such as dependency (Leah). Another reason why some believe that the U.S. foreign aid does not need to be changed is because of the success of foreign aid in the public health field. An example of this is in the HIV epidemic in Africa. Since 2000, the amount of new cases of HIV/AIDS has decreased by 35% and the number of AIDS related deaths have decreased by a quarter (Glassman). Although foreign aid helped to fund scientific research into prevention techniques related to AIDS, foreign aid is not the sole reason for the decrease in numbers. In fact in some areas, such as Sub-Saharan Africa, that receive a majority of aid sent to Africa, the pandemic has become worse.

All in all, long-term foreign aid to third world countries leads to economic, social, and political instability. Long-term food aid only creates food dependency, which as a result lowers food production and hurts farmers in recipient countries. Aid also leads to political dependency and political corruption when the leaders who caused the problems in the first place remain in power because they are the ones receiving the aid. Foreign aid also leads to social changes in countries that do not need or want the changes, such as Afghanistan. John Majewski describes aid in a similar way, “By increasing government power, destroying economic incentives, promoting unprofitable enterprises, and subsidizing misguided policies, current foreign aid increases Third World poverty,” (Majewski). Although aid brings with it many problems, foreign aid cannot be abolished. There will always be a need for aid because there will always be countries in poverty and in need of help. Aid is also important because it is morally right. Therefore, changing foreign aid would only improve the lives of people in need rather than adding to the countries problems.
