Foreign Policy Research Institute A Nation Must Think Before it Acts Billions Wasted in Foreign Aid—but at Least It’s Not Elitist

Billions Wasted in Foreign Aid—but at Least It’s Not Elitist

On Feb. 24 the United Nations Development Program commemorated its 50th anniversary. Beneath the boisterous celebration of past achievements, a UNDP background paper quietly sounded a sobering note. “Significant deprivations persist,” the paper stated, “and many problems faced today are deep-seated, structural in nature, and not susceptible to quick fixes.”

Such caution was in scarce supply in the heady early days of the U.N. after World War II, when wealthy nations poured money into the Third World in the belief that poverty would be eradicated within one generation. Experts in the West predicted that with technical assistance from foreigners to help jump-start social and economic development, the locals would acquire the necessary skills from the expatriates quickly.

Instead of withering away, however, foreign aid and technical assistance grew over time. The total amount of wealth transferred from prosperous to poor nations since World War II has surpassed $2.5 trillion, one-quarter of which has been spent maintaining the expatriate labor force. Some progress has been made in ending “extreme poverty”—defined as income of less than $2 a day—thanks in great part to the economic takeoffs in India and China. Nevertheless, according to the latest World Bank figures, more than two billion people are still living on less than $3.10 a day. Pestilence and starvation have been curbed in most of the Third World, but civil war, extremism and tyranny continue to run rampant.

During the 1950s and 1960s, leading development thinkers discerned that Third World nations were not making the same progress as Western Europe’s Marshall Plan recipients because they lacked elites with comparable educational levels and cultural beliefs. These experts convinced the U.S. government, private foundations and other major donors to support Third World universities and fund scholarships from the U.S. Agency for International Development (USAID) that brought 20,000 foreigners to American universities annually.

This article is derived from Moyar’s recent book, Aid for Elites: Building Partner Nations and Ending Poverty through Human Capital (Cambridge University Press, March 7, 2016)

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