Is Foreign Aid Effective? The View from Citizens in a Recipient Country

by Erik Voeten on September 6, 2012 · 14 comments

in Foreign Policy,International Political Economy

We are delighted to welcome the following guest post by Helen Milner (Princeton), Daniel Nielson (BYU), and Michael Findley (UT-Austin) in which they discuss the implications of a new working paper not presented at APSA.

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Is foreign aid effective? Much research on this question has focused on quantitative measures of large-scale outcomes like a country’s economic growth or level of democracy. These studies have come to mixed conclusions, and debate still rages over whether aid can effectively promote economic development, human rights, democracy, or countless other outcomes.

Prominent critics of aid, such as William Easterly and Dambisa Moyo, recite many of these studies’ findings about aid ineffectiveness.  Easterly and others attribute a good share of aid’s failings to the lack of feedback and accountability. As Easterly (2006:17) says, “The needs of the poor don’t get met because the poor have little political power with which to make their needs known and they cannot hold anyone accountable to meet those needs.”

We strongly agree with the point that feedback is a major problem for foreign aid. But criticisms of aid seem to assume that, in the absence of foreign funds, domestic governments would do a good—or even better—job helping the poor. However, we know that even in rich democratic countries the poor have a very hard time getting their voice heard by their own governments (Bartels 2008; Gilens 2012). The broken feedback loop motivated us to ask people in recipient countries what they thought of aid. In particular, we think the implicit assumption that governments in recipient countries are more attentive to the needs of the poor may be questionable.

We wanted to look at the question of aid effectiveness from a different angle.  What do the citizens in recipient countries think of aid? Do they perceive it to be useful and desirable? Few, if any, systematic studies of citizens’ views of aid in recipient countries have been conducted. Foreign donors sometimes collect such information, but do not release it for public consumption or scrutiny. To explore citizens’ reactions to aid, this summer we conducted a survey and field experiment on a nationally representative sample of Ugandans, as well as on a sample of local village council leaders, provincial governors, and members of parliament. We now have the data from roughly 3,600 Ugandan citizens, and our first report on these data is now available: http://ssrn.com/abstract=2134409.

We learned that Ugandans really like aid, and they want more of it. Uganda is a very poor country and it is heavily aid dependent. But even so, Ugandans by large majorities support additional foreign aid. More than 80% of respondents told us they wanted to see aid increased a lot as opposed to the one percent preferring that it be decreased substantially; 93% preferred at least some increase in aid versus 4% that preferred some decrease.

How do these results relate to aid effectiveness? Aid’s popularity seems to indicate that citizens in recipient countries see aid as beneficial.  However, nearly 80% of respondents also reported that they themselves have not directly benefited from aid, and nearly two-thirds of participants believed that more than half of aid dollars were not spent as intended.  How do we reconcile these beliefs with their strong desire for more aid?

It is critical to ask the question about aid effectiveness in a comparative way.  Is aid effective relative to other policies that could improve the quality of life for the public? This question of how aid compares to relevant alternatives is rarely asked. But it is key. We do not live in a perfect world; every policy has downsides and few may work at all. (Look at the long and intractable debates on macroeconomic policy where we have much evidence but no consensus.) So how does aid compare to other possible policies for serving the needs of Ugandans?

Our field experiment allowed us to address this question. We randomly assigned our nationally representative survey participants to receive information about identical projects sponsored by different foreign aid donors and compared them to a control group that was told about the projects without a donor specified, implying a domestic government initiative. This allowed us to compare foreign aid to government programs. We could also compare different donors to each other.

Data from our experiment clearly show that Ugandans significantly prefer foreign aid over government programs. Citizens are much more willing to pay personal costs by signing a petition or sending an SMS message to support aid projects than they are for government programs.  Our survey showed that citizens see aid as superior on many different dimensions. They view aid as less politicized, less corrupt, and more transparent than government programs. They also trust international organizations and foreign aid agencies more than all domestic government levels, including the popular president. And a large number of citizens support aid conditionality, where strict requirements must be met to receive future funds.

 

The study produced much evidence that Ugandans – when comparing the likely alternative of domestic programs – prefer foreign aid. Aid is not perfect, far from it, but it may be the best alternative for poor countries with weak domestic institutions and limited state capacity. And this may help explain why people strongly support aid, even if they do not benefit personally.

Ugandans had less intense preferences over which foreign donors were the best.  In general though, they preferred multilateral aid donors, such as the World Bank, to bilateral agencies, such as USAID. And this is despite the fact that bilateral donors bypass the government more in their aid projects relative to multilateral organizations. Again, citizens gave many of the same reasons as for their aid preferences in general: they saw multilateral assistance as more transparent and less politicized than bilateral aid.

A vigorous debate has raged for some time now over the effectiveness of foreign aid. Our study suggests that the views of citizens in recipient nations ought to be considered in the discussions.  Citizens in poor countries can provide vital insights about how well foreign aid works, especially compared to other feasible alternatives. Their views can inform our policy debates.  For instance, if large majorities in recipient countries want aid, as we find, should the donor countries reduce or end it? And if sizable numbers of citizens in recipient countries support aid conditionality, as our survey also reveals, should we end it, as some such as Easterly (2006) have proposed?

 

Bartels, L. M. (2008). Unequal democracy : the political economy of the new gilded age. New York Princeton, Russell Sage Foundation; Princeton University Press.

Easterly, William. 2006. The White Man’s Burden. NY: Penguin Press.

Gilens, Martin. 2012. Affluence and Influence: Economic Inequality and Political Power in America. Princeton University Press and Russell Sage.

Moyo, Dambisa. (2009). Dead aid : why aid is not working and how there is a better way for Africa. New York, Farrar, Straus and Giroux.

{ 14 comments }

Guilherme September 6, 2012 at 9:42 pm

Is this a field experiment? Sounds like a survey experiment to me.

RobC September 6, 2012 at 11:13 pm

One possible reason Ugandans prefer foreign aid over Ugandan government programs: somebody else is paying for it! Is that one of the dimensions that were investigated? And if not, what possible rationale would there be to ignore this most fundamental universal trait?

Joey September 7, 2012 at 9:12 am

Classic. Great question, “Is foreign aid effective?”, followed by an oddly designed, and unfortunately oversold, experiment that does not relate to that question. RobC is right; they asked people if they want free money. Turns out they do! I wonder which top-tier journal this will eventually get published in.

Rex Brynen September 7, 2012 at 10:32 am

To RobC and Joey: The “free money” problem may well confound any conclusions about preferences for donor vs nationally-funded aid, although it wouldn’t invalidate the findings regarding either particular external donor preferences nor the demographic variables associated with these. (A major problem in the research design is that it merely presumes that respondents identified projects as nationally-financed if no aid donor was mentioned in the information provided, which seems a rather dubious assumption.)

To Helen, Daniel, and Michael: In 1999-2000 the World Bank did extensive polling of both general public opinion and “elite opinion” in the occupied Palestinian territories regarding both aid priorities and donor effectiveness, as part of a broader assessment of aid effectiveness there (which I headed up). Many of the findings could not be used (since they either weren’t germane to the purpose to of the report, or were too sensitive to publish), but in general we found considerable divergence between mass opinion (broadly supportive of aid) and attitudes among elites, with donor officials tending to have views on aid priorities that were often more closely aligned with “grass roots” views. We were also able to identify which donors acquired the most political profile per million dollars expended, with the not unsurprising finding that local perceptions of a donor’s overall foreign policy had an important effect on this (ie, the US under-performed, France over-performed). Interestingly, Japan–which funnels almost all of its aid through multi laterals–did surprisingly well, despite the general donor assumption that aid via multilateral agencies diluted the degree of political credit that accrued. The reason, I suspect, was the extraordinary effectiveness of multilateral agencies in physically advertising the sources of external financing on-site. (This would apply more to bilateral support for discrete multilateral projects, however, than bilateral contributions to budget support).

RobC September 7, 2012 at 12:07 pm

Certain findings from a survey were too sensitive to publish? What could that possibly mean? Politically incorrect? Contrary to somebody’s preferred policy outcomes? I certainly hope there’s a reasonable explanation, because at face value it seems like Exhibit A to a charge of agenda-driven social science research.

Rex Brynen September 7, 2012 at 3:17 pm

Multimillion dollar aid coordination conferences can fall apart because a single participating country objects to a single word in a 300 page document (indeed, one famously did, with the Israelis objecting to the Arabic term for Jerusalem in an input paper). You’re darn right political sensitivity is something report-writers pay attention to, RobC.

Daniel Nielson September 7, 2012 at 3:28 pm

As the authors of the original post and the referenced study, we are grateful for the provocative comments — they provide grist for refining the project going forward. The comment that “of course Ugandans favor free money” is obvious and perhaps a bit too facile. Ugandans in our survey showed a sophisticated understanding that the foreign aid money is not free but comes with tight strings attached. Interestingly, they strongly favor the conditionality that often accompanies foreign aid. They generally see aid as a route to better government. In short, Ugandans favored aid not because it was “free” but because they saw it as more transparent, less politicized and, hence, less corrupt.

To avoid the possibility that all subjects simply signal support for more money, in the interviews our enumerators explicitly discussed the costs associated with the projects, including costs that would likely accrue to citizens directly. This underscores another point: we did not simply ask them whether they wanted more aid. Rather, we asked them whether they would support a project for which they saw the actual description, along with being willing to pay the costs of supporting that project in the future. That subjects were informed of those costs to themselves, and also that most reported they personally had not benefitted from foreign aid in the past, suggests that the simple “free money” argument isn’t in fact so simple.

The study is both a survey and a field experiment, polling citizens on their attitudes about aid but then also randomly assigning aid projects and inviting subjects to sign a petition or send an SMS message in support of the assigned projects. The field experiment probes behavior where subjects pay personal costs in support of randomly assigned aid conditions.

We thank Rex Brynan for the helpful tip to cite and engage the World Bank’s survey of aid recipients in Palestine. We look forward to reading the study.

More worrisome is Mr. Brynen’s insightful comment that we should not merely assume that subjects ascribe a project to the government when no donor is mentioned. We did not explicitly attribute the projects to the government out of fear that citizens might feel that enumerators represented the government and that it would bias responses. We do note that we performed a manipulation check and found that subjects’ response patterns were significantly different for the control than for the named donors. A follow-up check, soon to be in the field, enables subjects to identify the government as the funder of the project in the control condition, which we hope will provide better support for our claim.

Rex Brynen September 7, 2012 at 3:38 pm

Daniel: In the ephemeral world that is time-sensitive policy research, I’m afraid the final published version of the study is no longer available, although there is a version here: http://prrn.mcgill.ca/research/research_documents.htm (scroll down to the bottom).

Also note that the opinion survey work only made its way into the report in a limited way (in the “beneficiary assessment” section), as much of it was for our own information (and other parts weren’t robust enough to use–alas, the question set had been designed before I came on board as lead consultant/writer).

Daniel Nielson September 8, 2012 at 6:59 pm

Rex: Thank you for the link to the report. It looks very interesting. And I fully sympathize with the challenges of survey design, especially when working with international organizations and their standard procedures.

Steve Brewster September 10, 2012 at 2:48 pm

The discussion brings up the issue of whether it is reasonable to assume that the non-designated assistance was perceived as attributable to a government program. This made me wonder what other alternatives they might attribute it to? Civil Society Organizations perhaps? Which further made me wonder what the reaction of the survey participants might be comparing broadly the 3 alternatives of foreign aid, government programs and local CSOs? It could be very interesting to see how they compare.

I think this is a potentially important study, particularly given the current context of US aid being refocused to more direct government and/or local assistance (USAID Forward initiative). For anyone having worked in international development for anytime, I doubt if it is particularly surprising to discover that citizens don’t trust their government, particularly in fragile states (but of course this can even be an issue in all countries) … with the corollary that they would rather be helped by foreign entities that they perceive as being more trustworthy. Consequently, I wonder what the reaction of these citizens will be to receiving more direct program assistance from their governments (even though financed by foreign aid).

The article brings up an important point that often seems lost on the powers-that-be in the upper levels of bilateral and multilateral aid organizations, i.e. that there is a clear difference in opinion between a country’s elite (negotiating the terms of assistance programs) and the citizens (recipients of assistance). It has always astonished me that these powers-that-be often don’t seem to realize that this difference exists. I don’t know if I am being naïve in my surprise at this disconnect or if I am misinterpreting broader issues but, I lived for many years in the “cité” of Kinshasa while working on one of the early USAID programs that provided assistance directly to CSOs (rather than the government) and no one I knew would have wanted it any other way.

Cynically, one can easily tribute the reasons for the elite’s position … to have more “control” over the flow of funds. But, even with a more charitable interpretation (such as national pride), I think it unlikely that the “average” citizen’s opinion would change.

The case of Haiti is another forceful case in point. Since the earthquake, the somewhat saccharine slogan “build back better” has been the rallying cry. It seems like this is often being interpreted as (re)creating functional government institutions. But anyone who knows anything about the history or culture of Haiti knows that the local populations do not trust anything coming out of Port-au-Prince, whereas they have a vibrant local civil society (arguably too vibrant at times) that they depend on.

This is not to say that government institutions should not be strengthened with foreign aid. And it may also be true that the assistance to local NGOs ago has gone too far. But I worry that the never-ending pendulum of foreign aid policy shifts will swing too far again the other way (I can’t help but be reminded of a study done in the late 70s in Zaire that could find no trace of something like 50% of the assistance provided at that time).

The bottom line is that there should be a reasonable balance in foreign aid between government programs, local CSOs, etc. And this kind of study may well provide the kind of evidence-based findings (that everyone likes to talk about) to promote such a balance … rather than based on different parties’ perhaps contradictory intuition and/or incomplete understanding of the context.

To get back to my original point … it would seem like a prima facie case that local CSOs would be even more palatable to a citizen than a foreign aid project. After all, such community organizations would seem to be the very foundation of budding local democratization and governance efforts. But I do have to wonder how they are actually perceived by local populations. For one, there has been such a proliferation of “NGOs” in the last 30 years or so to fill anewly created grant void and there have been obvious abuses. One would have to control for “national” CSOs and CBOs of course. I do wonder what the results might be … they might be surprising. In any case, I do believe it is important that donor agencies “see” the evidence on the perception of foreign aid by the direct beneficiaries and not rely on other anecdotal (or seemingly “obvious”) interpretations.

Lee September 23, 2012 at 3:52 pm

Can you get anywhere close to this kind of analysis with the continent-wide Afrobarometer data?

Harvey F February 6, 2013 at 3:35 pm

Let worlds stand or fall on their own accord. Savage dust bowl nations in the Middle East and African nations are killing the pocket books of the West. We cannot afford to babysit every landscape with a “cut pinkie” while our body count rises and debt goes wild. How dare USA, France, Canada and others spend trillions on foreign aid or military intervention in backward nations like Iraq, Afghanistan and others while kicking our own people in the private parts while looking the other way while more of us slide into poverty levels. There are increased lineups at food banks in North America, homelessness, frail seniors who cannot afford gouging medical costs, massive unemployment with poor opportunities and a growing rift between the rich and poor. Our clown government leaders are more interested in global kudos than fixing their economies and putting people back to work. Fact, if Canada or the USA had a massive earthquake and broke apart few would help from the international community but we cuddle Libya, Haiti, Somalia, Mali, Egypt, Lebanon, Iraq, Israel and Afgnistan – countries you cannot trust. We are being betrayed within our own countries. This is why China and India are the new emerging dangerous superpowers with their grossly overpopulated worlds that put huge strain on food and natural resources we cannot sustain forever. Like the Roman Empire, the West will fall in time due to the sins of man. Tha amount of money we throw at Somalia, for example, could build a state-of-the-art desalination plant to give them the tools for fresh water and to grow crops. Instead, like the misuse of public funds given to many first nations bands in North America, the money is mismanaged only for them to whine for more. The foreign aid we give Somalia is often intercepted by crooked leaders, military, terrorists, drug cartels, war lords and pirates while the people suffer. Same goes for Pakistan and other freeloaders who crave our money only to see idiots in government wave a magic wand and forgive their loans. We gave $20milllion for Africa for condoms, what for, balloons? History does not lie, the missionaries for decades have tried to teach responsible sex practices and family planning and failed and then you have the element of AIDS. Why is our tax money going to others abroad while Canadians and Britians, etc. are asked to shoulder fiscal restraints, cutbacks in social programs, etc?

China and India do not get involved in dirty oil wars or throw money to the wind with careless recklessness. We cannot save the world including nations that get sucked into debt like Spain and Greece. Would you give away your job pay to some stranger in another land or several neighbors to pay for their medicine, food, car insurance, taxes, expenses etc. only to face your family and ask them to do without essentials like toilet paper, milk, medicine, etc? What hostilities would you justifiably face for your bleeding heart syndrome excessive generousity that is misplaced? Take care of your own social ills before looking to fix other lands! The conflicts in Egypt, Syria, Libya, Mali, Iraq and Afghanistan are killing us big time. As soon as we leave those oil wars they will go back to chaos, destruction, civil war, corruption, religious fighting and terrorism – little got accomplished just like Viet Nam. Let us not forget that, the West and others cuddled animals like Saddam Hussein, Mommar Ghadaffy and Noriega, etc. When is enough, enough? We have 34% of Canadians without dental care, rising debts, taxes, social ills and much more and we spend our money on others like little kids who inherited a fortune! The USA has suffered incredible twisters, hurricanes and more – where is Saudi Arabia, Jordan, Kuwait, USA, Libya and others? It is far time the oil rich Middle East fix their own regions than yap for our help while they sit on their backsides and their hypocritical kingdoms spend money like fools. Who is next to go rabid with a domestic problem and whine to the United Nations for help from the same old bunch of hero nations looking to play GI Joe or global bank? The amount of money we spent on Iraq and Afghanistan could put a large screen tv in every home in Canada and money in their bank accounts. Two bit parasite lowlife dictators like the Ben Ali family and others should be brought to international justice not some Islamic lands harboring them with safety from justice and these landscapes call themselves, Muslim people? Any nation giving safe passage to monsters like the Ben Ali family of Tunisia or Ghaddaffy clan should have global sanctions against them and trade barriers.The world is going wicked with increase crime, greed and hostilities in dangerous foreign lands that are sucking us down the tube. Nations around the world should be targeting the rich with far more taxes, limit space program spending chasing the damn stars and severely cull foreign aid in hard economic times and we should not give out bailouts to crooked/shady auto giants or banking industries for their chronic maladministration while they make incredible profits off our backs and give little to the consumer in return. The old addage, “don’t steal, the government does not like competition” and “ones a crook, the other a thief, who do you vote for”? This sums it up about government at all levels whether municipal, provincial, state or federal. We need to take care of our people, first and foremost, before others instead of stabbing them in the back while strangers get our high blood tax money. Publish the list of countries that gave money to the USA for hurricane Katrina? Where were many of our foreign aid receipents (Haiti, Peru, Caribbeans, Africa, etc.) during WW1 and WW2 when we were fighting the evil machinery of Hitler? Oh yeah, it was not their fight but they do not mind lining up for free tax money off our backs? Sad! Why is their problem, our problem? Name the nations who helped out in WW1 & WW2 and see the difference in the identities of those who are addicted to our overgenerous foreign aid!

We need to help abroad but not to the extent to let us slide into dangerous waters of debt and poverty. If the rich do not like being “fair game” to higher taxes and we protect them – then except the same that developed countries should not be a bank, police force, military or otherwise for others abroad who have “hatred, feuds, terrorism, wars, human rights violations” in their bloodlines. Stop the insanity, stop the abuse of the West, we have our own set of problems and cannot put more on our plate!!!!! This is not about racism and those visible token groups who make such claim, are often at best, the biggest racists! The Muslim world, in particular, the Middle East need to do more for their region instead of looking at others to help to do their dirty work of bringing stability to the region or fighting demented wild cards like pirates, terrorists, leech rulers and predators of all kinds. The Russians left Afghanistan and now we are up to our necks in the same nonsense? We think with bleeding hearts not with brains.

S>Babu February 24, 2013 at 1:56 am

I am very thank full to you, I am an poor artist can you help me for develop my business and my ability
Thank you,
S.Babu, Tamilnadu, India

S>Babu February 24, 2013 at 1:57 am

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