Government foreign aid does not encourage development and in many cases hinders it, said Mark Littlewood, Director-General of the IEA, commenting on the news that the government is to cut aid to 16 countries, whilst increasing the overall aid budget.
“The evidence is clear: government foreign aid does not aid development. In fact, in many cases it does more harm than good through crowding out private investment – investment which drives economic growth – and by fuelling corruption by local elites.
“The government is right to seek to focus the aid that it gives, and to focus more on outcomes rather than simply the amount of money given, but its decision to raise the overall international development budget lies in complete contradiction to the whole body of evidence regarding government foreign aid outcomes.
“Aid given by people, rather than governments, is more effective. Private charities are both more accountable and better able to direct aid to those who need it. Rather than frittering away taxpayers’ money, the government should slash its aid budget, cut back taxes and allow a culture of private philanthropy to thrive. Problems caused by poverty around the world would be far better dealt with in this manner.”
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NOTES TO EDITORS
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.