5. No Country ever became prosperous because of aid
No country in the world owes its success to aid, and the Philippines is not going to develop or lift its people out of poverty by aid either. They became rich by becoming successful market economies, and by investing and developing their people and their industries.
There is little to show for the over $100 billion of aid that have been poured annually into the poor countries. Even more important, it was established that aid has had little to do with the success of those countries that have successfully lifted hundreds of millions out of poverty.
European countries give roughly 0.5% of their GDP in aid, while the average Nordic country gives 1 percent. The United States and American private foundations gives more than 1 percent.
Aid encourages a culture of dependency. It is no wonder that many poor countries are now up in arms that instead of giving them aid, they would prefer market access and removal of trade barriers.
Over the last 40 years, the programs have been the same, the results have been the same, and yet we never learn. Since people has no capital, the government establishes that the best way to help them is to give them aid in terms of money ( is that a loan or a handout?). After billions of pesos have been defaulted with nothing to show for it, the continuing programs are still to grant more and more credit.
Access to credit is a very laudable objective but politicians and government bureaucrats makes very bad bankers.
May 20th, 2010 at 4:17 am
the NFA lost over 32 billion pesos in 2008 trying to buy rice at a high price, and selling it to consumers at a low price.
Quedancor lost over 650 million pesos due to unpaid loans.
I don’t know of any government credit program that has sustained success for even a few years.
May 21st, 2010 at 8:47 am
Agreed. Many countries in Africa are great example of the failure of AID and the culture of dependency and even laziness it developed.
May 21st, 2010 at 8:48 am
Bern, the rice we have been importing is allegedly overprice. This common belief probably explains why there has never been a definitive solution to our perennial shortage of rice.
June 14th, 2010 at 12:23 pm
aid would have been ok had it been properly accounted for. in one way it would help. but the problem really is like the Philippines and many other nations, it wasn’t properly accounted.
on the other end, you cannot depend on this in totality, which led me to one of more popular Filipino practices – that say for instance in a family of six, when one has a good job, he will have to feed the other five.
and in the end, no one becomes prosperous as this aid will never be enough.
June 15th, 2010 at 12:49 am
Eric,
thanks. the culture of dependency is strong, and the cultural trait that he who has more should share it with others is acting like a crab pulling the person down.
July 19th, 2010 at 4:07 am
Aid is good if it can provide returns from the aid (investment). If we treat aid as a form of investment where return of capital is required, it may provide positive results. As the saying goes ” give man a fish and the man may live another day, but teach the man how to fish and he will live longer and may help others in return”.
If the aid given by the government enables one to earn out of the aid, then we put value to the money allocated for aid.
For the NFA example cited by Berns, if instead of using the money to buy from farmers at a higher cost and selling it at a lower cost, the program is not sustainable in the first place and opens a lot for corruption. Instead, the money can be invested on infrastructures such as post-harvest processing and storage – distribution centers, and web-based Portals (source of employment for our IT/computer related courses graduates) where consumers and producers can meet, thereby removing the middlemen in the process.