Is Foreign Aid Effective? A debate with Christian Bjornskov
On the 10/02/2020, WIDs invited Christian Bjornskov to Warwick University to debate
foreign aid. Christian’s work with the IEA, coupled with his masters and PhD in economics,
has meant he has become a wealth of knowledge regarding the effectiveness of foreign aid.
He has tried to understand what goes wrong from good intentions to bad outcomes. His
research as led him to believe that, on average, foreign aid is not effective.
Looking at the origins of aid with the Marshall Plan of 1946, he discussed how aid is
politically motivated. This was seen then, with the Soviet Union preventing Czechoslovakia
from receiving any American money, and also in contemporary times, for example
“President Trump and I are pushing to draw a closer connection between US foreign aid and
how countries vote at the UN” – US ambassador, 2018. Bjornskov also addressed the flaws
to the current institutions such as the world bank which operate on the basis of Sach’s view,
that you can eradicate poverty by doubling foreign aid. Are there deeper problems than a
lack of resources?
Another topic discussed was the issue of geography. If a country is landlocked, making it
difficult to get their goods to market, is this why poverty prevails? This view is supported by
Sach but in the eyes of Bjornskov, the answer is no. He gave numerous examples of
landlocked countries like Switzerland and Singapore, highlighting how rich countries do lie in
the geography trap.
Then perhaps the most debated question was raised, ‘do we have a moral obligation to help
people?’. The answer in short is yes. But in a way that actually helps, not just looks good. Aid
cannot be treated in the same manner everywhere. For example, after the 2004 earthquake
and tsunami that followed, the same aid was given to Thailand and Sri Lanka. This aid was
extremely effective in Thailand, where there was cooperation with the government. But in
Sri Lanka, where the relief workers had to take on responsibility as there was a lack of
government cooperation, the aid was much less effective.
A big issue with monetary aid is where that money ends up. Bjornskov stated 10% of all non-
military aid ends up fuelling weapons. We cannot be sure what our money will end up
funding. What we can be sure of, as supported by Peter Bauer, is that aid changes political
incentives. And currently that is what aid serves as, a political purpose. Perhaps not much
change from the Marshall plan… Bjornskov believes that the UN will not change their
perspective, and that the 0.7% GDP guideline for foreign aid has no real meaning. He stated,
“It has to be high enough, but not too high to be offensive”. The main issue with this figure
is that, in Britain, we commit to the 0.7%, but we do not commit to the consequences. In
Bjornskov’s analogy this is like a doctor committing to giving a certain amount of medicine
to a patient but having no interest in whether they actually get better.
Regarding the future of aid, we need to see a bigger shift of focus to the consequences of
our aid and stop aid that doesn’t work. Bjornskov believes the solution is free trade. He gave
examples of industries which grew out of the civil war such as coffee in Peru (generating
855,000 jobs in remote/impoverished areas) and cut flowers in Kenya, both of which
employ poor people, and by being able to trade with them, has alleviated them from poverty. Current EU tariffs (such as on Spanish citrus fruits or Argentinian beef) have meant
the playing field is not equal for free trade. Only when this changes, will true free trade
prevail. Only then will we be able to actually help those in need.
Cicely Day, Talks Team