13 May Global Development Aid: Does Private Giving Count?
The U.S. is commonly denounced as stingy in economic development circles for failing to donate more foreign aid. Although the U.S. government spends about $19.7 billion a year in foreign aid, more than the next two countries combined, this amount is small relative to the size of U.S. GDP.
One response to this criticism is to point to private U.S. donations. According to the recently released Index on Global Philanthropy, private donations from the U.S. to foreign countries totaled $71 billion in 2004 (hat tip WSJ$). The majority of this $71 billion comes in the form of individual remittances from immigrants in the U.S. (legal or illegal) sending money home to their families.
There is a lot to like about using private foreign aid over public foreign aid. Private foreign aid has fewer transaction costs and, more importantly, is directed by private choices rather than in pursuit of a particular government policy. For instance, about $6 billion in U.S. aid goes to Israel and Egypt for political rather than economic development purposes.
But could private giving really supplant official government aid programs? Probably not. Although the improvement in worldwide information transfers has made it easier for private donors to choose how to allocate their money, no doubt there are worthy projects out there not getting funding. Still, I think it is fair to “count” private giving in some sense. It may not be U.S. government policy, but it is probably accomplishing as much if not more than most U.S. government development policies.
‘But could private giving really supplant official government aid programs?’ Absolutely not. Show me the compelling evidence that private giving is having a timely, measurable impact on the global reduction of poverty and I’ll reconsider. And please don’t infer from this any disparagement of private giving as such. It is clear that the affluent nations of the North have disproportionately benefited from the present geo-political and economic order and that those in the Southern hemisphere (and some regions in the North) have have proven vulnerable to the decision-making of elites in the North. And it won’t do here to cite the futility of addressing this topic in the dim light of the situation of countries in the ‘failed states index’ (i.e., it’s their problem, so they bear the lion’s share of responsibility). As Thomas Pogge has stated, ‘[W]e share responsibility not only for the damage authoritarian rulers can do to the interests of “their” people in international negotiations, but also for authoritarianism and corruption being so widespread in the developing world. In this vein it is often mentioned that our governments have instigated the violent installation of many oppressive rulers in the developing world, are selling juntas and autocrats the… Read more »
As a companion to the comment above, I’ve assembled a reading list (for summer!) of around 100 titles: ‘The Ethics, Economics & Politics of Global Justice: An Introductory Bibliography,’ that I will send (as Word doc.) to anyone who requests it. Be forewarned, it has a ‘Liberal’ (as outlined by a Stephen Holmes* or Gerald Gaus**)/’Leftist’ (as understood by the sociologist Richard Flacks***) orientation.
* See Holmes’ The Anatomy of Antiliberalism (Cambridge, MA: Harvard University Press, 1993), and his Passions and Constraint: On the Theory of Liberal Democracy (Chicago, IL: University of Chicago Press, 1995).
**See Gaus’ Value and Justification: The Foundations of Liberal Theory (Cambridge, UK: Cambridge University Press, 1990), Justificatory Liberalism: An Essay on Epistemology and Political Theory (New York: Oxford University Press, 1996), and Contemporary Theories of Liberalism (London: Sage, 2003).
***See Flacks’ Making History: The Radical Tradition in American Life (New York: Columbia University Press, 1988).
Finally (I promise), I might have mentioned how controversial the World Bank’s criterion (a money/income metric) for determining the poverty level is (so, for instance, surviving on two dollars a day may still be indicative of severe poverty), as it may grossly underestimate real poverty on a global scale. Please see the excellent article by Ingrid Robeyns, ‘Assessing Global Poverty and Inequality: Income, Resources, and Capabilities,’ in Christian Barry and Thomas W. Pogge, eds., Global Institutions and Responsibilities: Achieving Global Justice (2005), pp. 29-47.