The misconception around development aid

"Development aid reinforces poverty" – the Swiss media have used this headline in commenting on Nobel Prize Winner Angus Deaton's research. There's a major misunderstanding in this debate.

Ill-conceived development aid as it is being provided today for example in sub-Saharan Africa by some rich countries, would conceivably fare rather badly in Deaton's analysis. In this form, he writes, it would be better done away with, as it supports governments that cover far too much of their national budgets with aid payments, play off donor countries against one another and which are interested first and foremost in the well-being of their own clientele. This aid is hampering self-driven development, as it exists in every society, in every country. Above all, however, most of the aid helps the donors more than the recipients and is used in a largely undisguised manner as diplomatic lubricant for promoting donors' own economic and/or geostrategic interests. So far, so true.

But above all else, this finding is not really surprising as it largely coincides with criticism by Alliance Sud of misappropriated "aid" as it is practiced in many places today. Meaningful development cooperation operates differently: it strengthens civil society in developing countries and empowers them to stand up for their rights and hold their own governments to account.

Unlevel playing field

What is shocking is that in many places, the only part of Deaton's analysis that is adopted is that which fits in with the ideological worldview: Development aid is tantamount to squandering tax revenues. But Deaton repeatedly underscores that given the prevailing inequality, there is a moral duty to take truly effective action against poverty and underdevelopment. And in the chapter "What we should do", Deaton also outlines his understanding of this: through the World Trade Organization (WTO), the World Bank, the International Monetary Fund and numerous international treaties, poor and rich countries are very closely interconnected economically and politically. If the interests of the rich are affected, for example regarding patent protection, they do not hesitate to defend their privileges by tough lobbying. The Nobel Prize Laureate sees a further problem in the lack of technical expertise in the countries of the South, which not infrequently means that they are taken advantage of in international bodies and negotiations. Deaton is also critical of the fact that not only is aid going to dubious regimes, but that they are also being sold weapons at the same time. This money is lacking elsewhere and serves to increase the likelihood of armed conflicts – with disastrous consequences for development.

A teacher at Princeton (USA), the Scotsman Angus Deaton has received the Nobel Prize for his empirical research into how well-being can be reliably measured, how income and living standard relate to one another. In his latest book, which is also comprehensible to the general public, Deaton concludes that most of the parameters of well-being have indeed improved massively over recent decades. Yet he focusses his attention also on those who have so far also failed to benefit from this. And gives reasons for it.

Angus Deaton: The Great Escape – Health, Wealth and the Origins of Inequality, Princeton University Press, 2013, 360 pages.