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Why Foreign Aid is Dwindling

Author: Joshua Kurlantzick, Senior Fellow for Southeast Asia
August 9, 2010
Newsweek

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At the last G8 summit in June, the world's leading nations agreed to work hard on the usual litany of good causes--peace, global warming, etc.--with one notable exception. The issue that had dominated the summit just five years ago, foreign aid, got little mention. Perhaps that's not surprising, given how many rich nations are busy bailing themselves out of the debt crisis, but it is emblematic of a wider malaise: the death of generosity itself.

Just a decade ago, most Western economies were still thriving, and sitting Western leaders like Tony Blair and Bill Clinton were signing on to high-profile celebrity campaigns to boost public and private aid to the developing world. Bono became a global celebrity all over again, as a development expert. The Live 8 concerts and Global Call to Action Against Poverty day of 2005 brought together tens of millions of concerned citizens from around the world; economist Jeffrey Sachs's book on ending poverty through a massive new infusion of aid became a bestseller. In the Bush White House, the (empirically dubious) idea that poverty breeds terrorism gave rise to the Millennium Challenge Corporation, designed to boost aid and reward well-governed recipient nations. This attention paid off. Between 2001 and 2005, governments around the world more than doubled their allocations of foreign aid, setting the stage for the optimism of the 2005 G8 summit in Gleneagles, Scotland, at which all the G8 nations except Russia vowed to pitch in to a new $50 billion aid package to the world's poorest countries, including $25 billion annually to Africa. This new flow of aid was designed to help the poorest countries achieve the United Nations Millennium Development Goals for 2015, which included eradicating extreme poverty and hunger, and achieving universal primary education.

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