“The goal should not be to turn New Delhi into New York,” a friend recently commented about the balance of aid and trade. The statement was striking and the question it presented hit hard. Surely we want a future where there is no poverty. But what does that actually mean? What is the goal?
Let’s ask 2013. A lot of lessons about aid and development this year were a study in contradictions, showing just how difficult alleviating poverty is. Here are some of the things we have learned about aid and development in 2013:
1. The world is making positive progress
This year has introduced optimism to this subject. The Economist, The New York Times, and Business Week have published articles outlining the facts about the significant reduction of those living in extreme poverty around the world. In the last 20 years, the number of people living on the local equivalent to $1.25 per day in the U.S. has been cut in half.
2. The world still has a long way to go
Needless to say, “enjoying” an average daily expenditure of over $1.25 is not flourishing by anyone’s definition. Ensuring all people of the world live above the line of extreme poverty is an admirable goal, but it is not enough.
This year, we heard reports of the collapse of a garment factory in Bangladesh, which killed thousands of workers. An upscale mall in Nairobi, Kenya was terrorized and held under siege for almost three days by militants associated with Al-Shabaab, a terror cell that runs the failed state of Somalia. The once glamorous automobile capital of the world, Detroit, filed for bankruptcy several months ago. It’s obvious we have a long way to go.
3. Economic growth reduces poverty … 4. but not always
Recent history has dictated more trade will occur regardless of whether development experts want it. The main issue is now; does the increasingly egalitarian global economy create increasingly egalitarian societies?
Experts argued over this question this year. Some said that growing GDP means growing incomes and increased livelihoods, while others pointed out that in countries with rapid growth, such as India, poverty numbers are declining relatively slowly, showing that economic growth is simply making the poor poorer and the rich richer.
5. Child sponsorship is effective … 6. but maybe not in the way you thought
Good news! That warm feeling you feel when you walk by your refrigerator and see the picture of a child you sponsor halfway around the world is not in vain. A very comprehensive and statistically head spinning analysis of Compassion International’s Child Sponsorship program found both large and significant impacts on education for sponsored children.
Here is the catch: Different organizations have different methods and goals for child sponsorship. Some—such as Compassion—give your money directly to the child, while others—such as Word Vision—give that money to support projects that target the community where your sponsor child lives.
Many share a feeling that community driven programs have a slightly higher long-term impact than programs focusing on individuals. When a child becomes educated and has aspirations beyond his peers, what prevents that young person from leaving his or her hometown in rural Brazil to find a job in Sao Paulo? Now the rural community is no better off and the rural-urban development gap is widened.
7. Just giving money actually helps … 8. but only in some places
It is a lesson embedded in any Economics 101 syllabus: When somebody has more stuff (money, books, livestock, fertilizer) they have more choices and greater opportunity.
A recent study attempted to understand this theory better; they just gave money to poor farmers in rural Western Kenya and observed the effects. Would the farmers waste the money or would the money be used for productive purposes? As it turned out, the farmers invested in productive ways, generally either in their home (replacing the thatch roof) or in their business (purchasing inventory or a motorbike).
Unfortunately, the conclusion of this study may not be true for the world at large. A similar program was evaluated in both Liberia and Bolivia and found that the recipients of these cash grants ended up using the money for unproductive activities, i.e. celebrations or alcohol. It seems just giving people money works, but only in carefully selected regions of the world with a particular set of values and opportunities. In other places, giving a cow or fertilizer may be better.
9. Foreign aid can be good … 10. but it can also be bad
It really all depends on what is meant by foreign aid. Aid can come from governments, nonprofit organizations, businesses and individuals. It can go toward health, education, water access, infrastructure, governance, businesses, families or children.
The pitfalls of aid are well known. It can prevent capable people from solving their own problems. It often creates dependency. It almost certainly undermines and distorts the incentives of local political and economic institutions. Just because these side effects are known does not mean that all aid is bad. Some aid is absolutely necessary and is very beneficial.
11. The world is learning how to do good better
Rather than make policy decisions and strategic organizational plans based on hunches and textbook theories, policy makers and practitioners are beginning to see the benefit of fighting poverty with actual evidence. Instead of just assuming whatever they learned in school is correct, researchers are working around the world trying to figure out what works and what doesn’t, what helps and what hurts.
12. Learning what helps and what hurts is still really hard
Gathering actual evidence to fight poverty sounds really great. The major challenge, however, is evaluations of this nature are often expensive and always challenging to execute well. Human behavior, achievement and success are dependent on seemingly endless factors. The best evaluations control for as many of these factors as possible, but to do this completely in a real world setting is extremely challenging.
13. Our goal, our vision needs to be the New Jerusalem
The final lesson, given the previous 12; is we need to recalibrate our goals. The goals of those who want to modernize every inch of this planet through freer trade have failed (see the garment factory in Bangladesh and the bankruptcy of Detroit). Similarly, the goals of those who want to restrict trade and global interactions between countries have also failed (see Somalia and the Nairobi mall attack).
The path, while rocky, is clear. A Christian voice and a biblical vision are now needed more than ever. The goals of secular experts are fleeting. Even the most modernized countries have experienced civic hardship and economic decay. As my friend told me, “The goal should not be to turn New Delhi into New York … The goal should be to turn both into the New Jerusalem.”