Foriegn Aid: Individuals Over Macro Economic Policies

2169 words - 9 pages

In 2009, the UN Food and Agriculture Organization publicized that over one billion people globally suffered from hunger (Banerjee and Duflo 19) and economists estimate that at least one billion people live off of less than one U.S. dollar a day (Ovaska 1). With these facts present, recent scholarly debate has risen over recent years over whether foreign aid successfully works toward the removal of poverty. Two opposing viewpoints have arisen. Economists and philanthropists similar to Jeffery Sachs believe that a poverty trap confines countries with lower GDP per capita and higher rates of populations living beneath the poverty line which calls for the assistance of outside aid in order to free populations from perpetual poverty. Such economists promote foreign aid with the belief that the proper amount of foreign aid such as the implementation of schools, freshwater wells and subsidized food costs can free those stricken with poverty. However, many other economists such as Dambisa Moyo believe that foreign aid merely disrupts local economies causing more harm than benefit to developing nations. Since the 1970s, the real per capita income of Africa has dropped (Moyo 5) and similar drops have occurred in other developing nations worldwide. Foreign aid focused on reaching the specific needs of an individual more affectively fights poverty than aid projects aimed at large-scale economic progress.
The root of the economic argument comes from the debate over whether certain regions or nations currently impoverished are more prone to poverty and whether a lack of resources or a beneficial climate can lead to economic shortages. Those in favor of the idea that climates and resources determine economic fate favor an idea known as geographic determinism. According to geographic determinism, all aspects of a region’s geography directly contribute to a society’s success and developing nations with low gross domestic production per capita struggle due to the inevitable fate attached with the geography they inhabit. Similarly, economists in support of aid believe in the idea of the poverty trap. Jeffery Sachs describes this theory in his book The End of Poverty. “When countries get their foot on the ladder of development, they are generally able to continue the upward climb…If a country is trapped below the ladder, with the first rung too high off the ground the climb does not even get started (Sachs 73).” This theory supports the idea that, along with geographical determinism, lack of education, inability to collect tax revenues, lack of infrastructure, health problems and the fact all resources are needed to go toward nutrition, cause societies to be unable to help themselves. Within the poverty trap zone, projected incomes and GDPs are lower than current incomes and GDPs. Supporters of the Poverty trap believe that developing countries need foreign aid to get out of this perpetual pitfall.
The argument of geographic determinism is not valid and fails to...

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