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Foreign Aid, Development Strategies and Poverty Reduction

Globalization brings the suffering of the world's poor directly to the attention of those fortunate to have been born non-poor in high-income countries. And there is plenty of suffering. In 2004, an estimated 969 million people - more than 18% of the world's population - lived on less than roughly $1/day per person and were thus classified as "extremely poor" by global standards (Chen and Ravallion 2007). Indeed, outside of China, the developing world has not enjoyed any sustained progress over the past quarter century in reducing the number of extremely poor people. Meanwhile, in some regions the number of extremely poor people has increased significantly. In sub-Saharan Africa, even in the face of population growth, the extreme poor have consistently accounted for 41-48 percent of the subcontinent's residents since good estimates began around 1980. For Christians especially, Jesus' injunction that, "Whatever you do to the least of my brethren, you do to me." (Matthew 25:40) reminds us that to ignore the suffering of others is an offense against God. Hence the Christian's natural instinct to provide aid to the poor. However, good intentions and good deeds do not always translate into favorable results, as the checkered history of foreign aid makes clear. Foreign aid - the transfer of government resources to poorer countries - has long been deemed an essential part of any strategy to reduce poverty and hunger. It encompasses both short-term relief of suffering resulting from natural disasters and war, as well as longer-term development to end chronic deprivation. The modern era of foreign aid began with post-World War II reconstruction, in particular the Marshall Plan, when the United States devoted 2-3 percent of its national income annually to restore war-ravaged Europe. Once European recovery was well underway by the second half of the 1950s, Europe's former colonies in Africa and Asia began achieving independence and became the new foci for foreign aid. Over the intervening half century, aid has become an industry, professionalized in United Nations agencies, multilateral development banks and a vast network of non-governmental organizations (NGOs) committed to humanitarian relief, long-term development, or both. Cassen (1987), Mosley (1987) and Tarp (2000) provide excellent histories of foreign aid.