Home
/
RELIGION & LIBERTY ONLINE
/
How Foreign Aid Can Keep Poor Countries in Poverty
How Foreign Aid Can Keep Poor Countries in Poverty
Oct 17, 2026 4:17 PM

Giving foreign aid directly to poor countries may end up keeping those countries poor.

For most readers of this blog and others associated with the Acton Institute this claim will be neither surprising nor controversial. Indeed, it’s been a core assumption behind our work on PovertyCure. But until recently, many Americans would have found the idea to be counter-intuitive, if not obviously wrong.

But thanks to the work of the Angus Deaton, the recent winner of the Nobel prize in economic sciences, the conclusion that long-term aid can hinder a country’s economic growth is ing so mainstream it’s almost a matter of conventional wisdom.

One of the reasons for the change is because Deaton is particularly adept at explaining the reasons why aid can hurt the poor in a way that are easy for the public to understand. For example, Deaton explains how foreign money often changes the relationship between a government and its people:

Think of it this way: In order to have the funding to run a country, a government needs to collect taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount of control over their government. If leaders don’tdeliver the basic services they promise, the people have the power tocut them off.

Deaton argued that foreign aid can weaken this relationship, leaving a government less accountable to its people, the congress or parliament, and the courts.

“My critique of aid has been more to do with countries where they get an enormous amount of aid relative to everything else that goes on in that country,” Deaton said in an interview with Wonkblog. “For instance, most governments depend on their people for taxes in order to run themselves and provide services to their people. Governments that get all their money from aid don’t have that at all, and I think of that as very corrosive.”

Economists have long noted that in weak countries there can be a “natural resource curse.” If an otherwise poor country, like Libya or Venezula, has an abundance of one natural resource (such as petroleum) the government leaders can simply nationalize that industry or confiscate the proceeds to fund a regime that has little to no support from the people.

Unfortunately, the same can occur when rich countries give money directly to poor nations. As the Washington Postnotes,

Deaton and his supporters offer dozens of examples of humanitarian aid being used to support despotic regimes pounding misery, including in Zaire, Rwanda, Ethiopia, Somalia, Biafra, and the Khmer Rouge on the border of Cambodia and Thailand. Citing Africa researcherAlex de Waal, Deaton writes that “aid can only reach the victims of war by paying off the warlords, and sometimes extending the war.”

Foreign aid can sometimes be beneficial, especially in short-term disaster relief efforts. But when aid es another resource to be fought over for political gain, it can harm those who it was most intended to help.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
What Auto Racing in Finland Can Teach Us About Poverty
Many people believe laws to protect ownership and private property primarily favor the wealthy. But as Prof. Dan Russell explains, lack of property protections can lead to abject poverty. (Via: Institute for Faith, Work, and Economics) ...
What the Oregon Medicaid Study Tells Us About Big Government
If a large Oregon study is any indication, says Jonathan Witt in this week’s Acton Commentary, the Affordable Care Act may drive up frivolous emergency room visits and do little to improve people’s physical or economic health: In essence, the healthcare industry es the enabler in a lucrative game in which patients put off needed lifestyle reform, opting instead for prescription pills, surgeries and conversations about “genetic predispositions.” None of this gets at the root problem, and indeed exacerbates the...
Pittsburgh’s Physician to the Homeless
Five nights a week, Dr. Jim Withers walks the streets of Pittsburgh bringing free medical help to the homeless. Since 1992, he has served over 25,000 impoverished people in need of care. Dr. Withers and others like him are doing important, praiseworthy work. But we should be careful that we don’t confuse this stop-gap measure with a solution. Providing care on the streets is necessary — for now. The goal we must work toward, though, is to help these citizens...
University Study: Obamacare Cost West Michigan 1000 Jobs
A new study by Grand Valley State University professors Leslie Muller and Paul Isely suggests that the Affordable Care Act has already cost West Michigan 1000 jobs. Muller summarized the results in a Wood TV story: “Firms are actually holding off on hiring or their reducing their hiring that they were thinking they were going to be doing because of the ACA,” said Muller. The 1,000 jobs lost does not include the number of workers in West Michigan that have...
He Has a Pen, We Have a Constitution
On Tuesday, in his first cabinet meeting of the year, President Obama indicated he is prepared to use executive actions more frequently to advance administration goals. “We are not just going to be waiting for legislation in order to make sure that we are providing Americans the kind of help that they need. I’ve got a pen and I’ve got a phone,” Obama told his Cabinet. Over at First Things, Robert George, Professor of Jurisprudence at Princeton University, provides a...
Acton University 2014 Speaker Spotlight: Judge Andrew P. Napolitano
The focus of Acton University is scholarship: the participants spend their days learning from a faculty that is wide-ranging, plished, and masters in their chosen fields. The Acton Institute is pleased that Judge Andrew Napolitano, currently a Fox News Senior Analyst, will be joining us to teach “Freedom of Conscience and the Constitution.” Judge Napolitano, author of numerous books including It Is Dangerous to Be Right When the Government Is Wrong: The Case for Personal Freedom and Theodore and Woodrow:...
Is Income Inequality Really About Marriage?
President Obama has called e inequality the “defining challenge of our time,” but is it strictly about paychecks? Ari Fleischer thinks there is definitely more to it; he believes it’s about the breakdown of the family and American rejection of marriage. “Marriage inequality” should be at the center of any discussion of why some Americans prosper and others don’t. According to Census Bureau information analyzed by the Beverly LaHaye Institute, among families headed by two married parents in 2012, just...
Hoisting the Black Flag
“It’s possible. I kill a lot of people.” H.L. Mencken once said, “Every normal man must be tempted at times to spit on his hands, hoist the black flag, and begin to slit throats.” Over at Political Theology Today, I take a look at what a confrontation between a pirate and Alexander the Great has to teach us about politics and proximate justice, taking some cues from Augustine and Cicero, and in conversation with John Mueller and Peter Leeson. For...
The Acton University Experience: ‘Touched My Very Soul’
Over the next few weeks, the PowerBlog will be featuring people who have attended Acton University and their experiences, via podcasts. By hearing how Acton University has affected a variety of people in so many ways, we hope to encourage those who’ve never been to Acton University to consider registering for AU 2014. Today’s podcast features Becki Essner, a teacher at Notre Dame Regional High School in Cape Girardeau, Mo. Becki has attended Acton University three times, and has been...
A lesson in intuitive economics from a saloon on the moon
It was once mon practice of saloons in America to provide a “free lunch” to patrons who had purchased at least one drink. Many foods on offer were high in salt (ham, cheese, salted crackers, etc.), so those who ate them naturally ended up buying a lot of beer. In his 1966 sci-fi novel, The Moon Is a Harsh Mistress, Robert Heinlein used this practice in a saloon on the moon to highlight an economic principle: “It was when you...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved