Published in the The Australian on April 6, 2013
By Tim Costello, World Vision Australia chief executive
Is foreign aid effective? The authors of two pieces in last Saturday's Inquirer would argue that it isn't. But it all depends upon what you are expecting.
If you expect aid to kick-start economies and result in continuous economic growth then you might be disappointed. But if you see healthy, well fed and educated children where previously there was illness, death and lack of opportunity, you will have a very different view.
It is understandable that people want aid to generate economic development - after all it is essential to self-sustaining poverty reduction in any poor country. However this is not the only purpose of aid, nor its main target.
The evidence is inconclusive about aid's ability to generate economic growth. There are no simple paths to development - it is a complex process shaped by power, governance, culture and international circumstances. Aid may assist by supporting the development of better governance and infrastructure and by ensuring people are healthy and educated. But you can't rely on aid to kick-start economies.
This is particularly the case given that the amounts of aid provided are very small. Since 1960 OECD countries have contributed more than 3.6 trillion in today's dollars in aid. This sounds like a lot but works out at only $20 per person in developing countries each year. Not likely to be anywhere near enough to transform a society, or convince a government to follow a particular path. It is a transfer of less than 0.3 per cent of Western income.
Most aid expenditure goes to reducing the worst impacts of poverty on people - making sure that all children have the chance to grow up strong and healthy, that they have a good education and that families have enough food to eat and are able to contribute to developing their societies.
At this level aid has been spectacularly successful. For instance, since 1990 global child deaths have fallen by more than 40 per cent, maternal deaths by nearly 50 per cent and the number of children who could not get an education has been cut by 42 per cent. Economic development has been a large part of this, but so has aid, as the improvements have also been made in countries with low rates of economic growth.
Some critics also argue that aid leads to ongoing dependency on a country's wealthier neighbours, but only 12 countries (mainly very small island states) receive 20 per cent or more of their national income from aid. In fact, many of the countries that were previously recipients of Australian aid now enjoy strong, robust economies and have established their own aid programs to contribute to the global campaign against poverty.
When people say aid doesn't work they must have very different glasses on to me. For in my travels I see the impact of aid everywhere and what I experience is confirmed by the data, which shows that child and maternal deaths have plummeted, the major killer diseases are being turned around and tens of millions more children, especially girls, are getting a good education.
In Australia I and others are calling for both sides of politics to meet their commitment to increase aid to 0.5 per cent of our national income by 2016. I am doing this because I know what aid is achieving and because I also know that there are millions of children still dying unnecessarily each year, millions of people with no access to AIDS and TB treatment, and tens of millions of children still out of school. Australia can more than afford it. Our current aid uses just 1.4 per cent of the budget, yet it generates more human benefit than any other expenditure of our government.
Aid programs are not perfect - after all they are often the product of competing political visions and interests, and are being carried out in very difficult environments. But it is amazing what they have achieved to date and how many lives they have transformed.