Aid may often be criticised, but it works, says the Gates Foundation.
We worry about the myth that aid doesn’t work. It gives political leaders an excuse to try to cut back on it – and that would mean fewer lives are saved, and more time before countries can become self-sufficient. So we want to take on a few of the criticisms you may have read.
We should acknowledge up front that no programme is perfect and there are ways that aid can be made more effective.
And aid is only one of the tools for fighting poverty and disease: wealthy countries also need to make policy changes, such as opening their markets and cutting agricultural subsidies, and poor countries need to spend more on health and development for their own people.
But broadly speaking, aid is a fantastic investment and we should be doing more. It saves and improves lives very effectively, laying the groundwork for long-term economic progress, which in turn helps countries to stop depending on aid.
Many people think that development aid is a large part of rich countries’ budgets, which would mean a lot can be saved by cutting back. When pollsters ask Americans what share of the budget goes to aid, the average response is “25%”. When asked how much the government should spend, people tend to say “10%”.
We suspect you would get similar results in the United Kingdom, Germany and elsewhere.
Here are the actual numbers. For Norway, the most generous nation in the world, it’s less than 3%. For the United States, it’s less than 1% of its budget, which is about $30-billion a year. Of that, roughly $11-billion is spent on health – vaccines, bed nets, family planning, drugs to keep people with HIV alive and so on. The other $19-billion goes to things such as building schools, roads and irrigation systems.
We don’t want to imply that $11-billion a year isn’t a lot of money. But to put it in perspective, it’s about $30 for every American. Imagine that the income tax form asked: “Can we use $30 of the taxes you’re already paying to protect 120 children from measles?” Would you check yes or no?
Impact: the numbers
It also helps to look at the overall impact this spending has. To get a rough figure, we added up all the money spent by donors on health-related aid since 1980. Then we divided it by the number of children’s deaths that have been prevented in that same time. It comes to less than $5 000 per child saved (and that doesn’t include the improvements in health that go beyond saving the lives of young children). $5 000 may sound expensive but keep in mind that US government agencies typically value the life of an American at several million dollars
We calculated the drop in child mortality since 1980, the start of the “child survival revolution” that made vaccines and oral rehydration therapy much more widespread. It comes to 100-million deaths averted. The total amount of aid, $500-billion, counts money for vaccines, HIV, family planning, and water and sanitation from all donors since 1980. This calculation does not take into account how child mortality might have declined without aid, which would increase the cost per life saved. On the other hand, we included a lot of aid that wasn’t meant to save children – but, say, to treat adults with Aids. So overall this calculation overstates the cost per life saved.
One of the most common stories about aid is that some of it gets wasted on corruption. It is true that, when health aid is stolen or wasted, it costs lives. We need to root out fraud and squeeze more out of every dollar.
But we should also remember the relative size of the problem. Small-scale corruption, such as a government official who puts in for phony travel expenses, is an inefficiency that amounts to a tax on aid. Though we should try to reduce it, there’s no way to eliminate it, any more than we could eliminate waste from every government programme – or from every business, for that matter.
Suppose small-scale corruption amounts to a 2% tax on the cost of saving a life. We should try to reduce that. But if we can’t, should we stop trying to save lives?
We have heard people calling on the [US] government to shut down some aid programme if one dollar of corruption is found. On the other hand, four of the past seven governors of Illinois have gone to prison for corruption and to our know-ledge no one has demanded that Illinois schools be shut down or its highways closed.
Particularly in health and agriculture, we can validate the outcomes and know the value we’re getting per dollar spent.
More and more, technology will help in the fight against corruption. The internet is making it easier for citizens to know what their government should be delivering – such as how much money their health clinic should get – so they can hold officials accountable. As public know-ledge goes up, corruption goes down, and more money goes where it’s supposed to.
Another argument from critics is that aid holds back normal economic development, keeping countries dependent on the generosity of outsiders.
This argument makes several mistakes.
First, it lumps different kinds of aid together. It doesn’t differentiate between aid that is sent directly to governments and funding that is used for research into new tools such as vaccines and seeds.
Second, the aid-breeds-dependency argument ignores all the countries that have graduated from being aid recipients, and focuses only on the most difficult remaining cases. Here is a quick list of former major recipients that have grown so much that they receive hardly any aid today: Botswana, Morocco, Brazil, Mexico, Chile, Costa Rica, Peru, Thailand, Mauritius, Singapore and Malaysia.
South Korea received enormous amounts of aid after the Korean War and is now a net donor. China is also a net aid donor and funds a lot of science to help developing countries. India receives 0.09% of its gross domestic product in aid, down from 1% in 1991.
Even in sub-Saharan Africa, the share of the economy that comes from aid is a third lower now than it was 20 years ago, although the total amount of aid to the region has doubled. There are a few countries such as Ethiopia that depend on aid, and, although we all – especially Ethiopians themselves – want to get to a point where that is no longer true, we don’t know of any compelling argument that says Ethiopia would be better off with a lot less aid today.
Critics are right to say there is no definitive proof that aid drives economic growth. But you could say the same thing about almost any other factor in the economy. It is very hard to know exactly which investments will spark economic growth, especially in the near term. But we do know that aid drives improvements in health, agriculture and infrastructure that correlate strongly with growth in the long run.
In last month’s edition of the medical journal The Lancet, global health experts and economists wrote that, with the right investments and changes in policies, by 2035, every country will have child-mortality rates as low as the rates in the US or the UK in 1980.
Let’s put this achievement into historical perspective. A baby born in 1960 had an 18% chance of dying before his or her fifth birthday. For a child born today, the odds are less than 5%. In 2035, they will be 1.6%. We can’t think of any other 75-year improvement in human welfare that would even come close.
To get there, the world will need to unite around this goal, from scientists and health workers to donors and recipient countries.
Many low- and middle-income countries will develop enough to pay for this convergence themselves. Others will need continued generosity from donors, including investments in health-related research and development.
Governments will also have to set the right policies. For example, middle-income countries should look at taxing tobacco and at cutting fossil-fuel subsidies to free up funding for health.
Above all, we hope we can stop discussing whether aid works and spend more time talking about how it can work better.
This is especially important as you move from upstream research on global public goods into the downstream effort of delivering these innovations. Are the recipient countries in charge of figuring out where health clinics should be built and training the workers? Are donors helping local teams to build up the expertise they need to put the Western experts out of business? Are the best performers sharing the lessons they have learned so other countries can follow suit?
For a long time disparities in health have been some of the worst inequities in the world – it is unjust and unacceptable that millions of children die every year from causes that we can prevent or treat.
A child’s fate should not be left to what Warren Buffett calls the “ovarian lottery”. If we hit this goal of convergence, the ovarian lottery for health outcomes will be closed for good.
This is an edited excerpt of Bill and Melinda Gates’s annual letter, titled Three myths that block progress for the poor. They are the co-chairs of the Bill and Melinda Gates Foundation, which provides health aid to developing countries.