Privatize aid?
Citing the Hudson Institute's 2007 Index of Global Philanthropy, the Wall Street Journal [subscription required] asks whether, on the grounds of efficiency, the private sector should take over foreign aid:
Yes, the wealthy world must attempt to pull lagging nations into the expanding, global economy. But an aid system that duns middle-income taxpayers for cash that is routed through Beltway contractors and into often corrupt Third World governments isn't the only way to do this. Those middle-class taxpayers seem to know how to give effectively on their own, and they have every incentive to be more careful and efficient with their own money.
[…] a moderately priced U.S. government consultant working in a developing country costs $300,000 per year, the private sector hires the same skilled professional at just over $100,000.
A growing portion - about a fifth - of all reported official and private aid to developing countries has been provided or managed by NGOs and public-private partnerships. With solid salaries, NGOs aren't having trouble attracting more and more MBA grads though an FT reader questions their motivation.
Comments (3)
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One of the criticisms of that report is that it includes remittances from the US as part of US foreign aid, as well as private charitable contributions from private US citizens and companies. This methodology is very different then for example the Center for Global Development's Index. While donations are ok - many really dont like the inclusions of remittances. If you are going to include remitances as "foreign aid" - that a migrant visa/worker program would be the ultimate privatization of foreign aid that the US could do.
Also, while more aid is important. Effectiveness and coordination are essential. Is coordination possible if we rely on lots of small donors and NGOs? And who tackles the stuctural or not high profile issues?
Posted by: PH | Jul 9, 2007 11:12:31 AM
The Wall Street Journal article is heading in the right direction, the idea merely needs to be expanded. Developed countries should allow tax deductions to their taxpayers for all investments and philanthropic aid to designated underdeveloped countries that would otherwise be the recipients of government-to-government aid, converting the assistance into people-to-people aid.
The donors may, but the real live investors will,then be directly involved in assisting the people in the poor nations. In other words people-to-people aid.
Total aid budgets could eventually be converted into people-to-people aid, making it infinitely more efficient but most importantly, bringing the real donors into direct contact with the real recipients. Aid provided in this matter would create enormous goodwill between the respective nations, not the ungracious demands that have become symptomatic of current government-to-government aid, a great deal of which does not reach the intended recipients.
Coordination towards a central recipient goal is not necessary and probably undesirable. Concerned donors are eminently qualified to select the most deserving recipients. Hard-headed business people are perhaps even more qualified to select the most promising growth areas for business.
Donor nation governments can assist by persuading recipient nation governments to firstly, not interfere in the delivery process, and secondly, to remove obstacles that impede the functioning of the businesses and services the donors and investors are supporting.
Posted by: Eustace Davie | Jul 15, 2007 12:49:23 AM
Reminds me of the second picture in this article:
http://www.theonion.com/content/node/38758
Posted by: redteam | Jul 20, 2007 6:35:25 PM