Trade or Aid?

Thursday 7 November, 4.35pm until 6.00pm, Statoil ASA Fornebu, Oslo, Martin Linges vei 33 1364 Fornebu, Norway International Satellite Events 2013

In 2012, Norway’s government allocated 27.8 billion kroner for such development, a higher percentage of GDP (just over 1%) than any other country. The UK government has pledged to increase its aid spending to 0.7% of GDP. Nevertheless, a recent report from the Norwegian Institute of International Affairs found 62% staff in the country’s embassies and consulates believe Norwegian interests are better served by private investment rather than ‘soft’ ideals. Moreover, some argue Norway’s direct financial interest in several African countries (such as Statoil and Statkraft in Angola, Algeria and Tanzania) is more also beneficial than aid for those countries themselves. This echoes the views of Zambian economist Dambisa Moyo, who argues trade and investment are more beneficial than hand-outs.

With historic aid recipients such as India and China becoming economic giants, critics argue aid is outdated: China has reduced its population in poverty from 452m to 278m through economic growth; China, Brazil, and South Africa are now aid givers; and the embarrassing controversy about India’s rejection of British aid in 2012 means the UK will no longer provide aid to India from 2015. Indeed, in current circumstances, some ask whether countries like Britain can afford aid. A 2012 spoof music video asked Africans to donate radiators to the freezing children of Norway, and struck a nerve. Many Africans are fed up with seeing their continent presented as beyond hope. And Western aid, often with strings attached, is even blamed for creating dependency and low expectations. The Make Poverty History campaign and UN Millennium Development Goal sought to halve the number of people living on less than $1 a day by 2015, but seemed less committed to creating the conditions for economic growth.

So is Oxfam right that aid is indispensable if poor countries are to work their way out of poverty? Or should it be scrapped in favour of a trade-based approach? Is even trade less effective than foreign direct investment? Or is such investment no more than self-serving exploitation of the developing world by multinationals? What purpose does aid serve: a safety net for the world’s poor? A vehicle for good governance? To serve donors’ national interest as soft foreign policy? Or to make us in the West feel better about ourselves? Should aid be a government issue at all, or best left to charities to organise independently?

Daniel Ben-Ami
journalist and author, Ferraris for All: in defence of economic progress and Cowardly Capitalism

Anne-Marie Helland
general secretary, Norwegian Church Aid

Eirik Løkke
fellow, Civita

Bosse Lindquist
documentary director, Sveriges Television/Swedish Television; films include aid documentary, Give Us the Money

Andrew Preston
director, Forum for Environment and Development

Claire Fox
director, Academy of Ideas; panellist, BBC Radio 4's Moral Maze; author, I Find That Offensive

Produced by
Claire Fox director, Academy of Ideas; panellist, BBC Radio 4's Moral Maze; author, I Find That Offensive
Recommended readings
Good African Coffee wants trade, not aid

Tired of seeing developed nations take the lion's share of profits from his countrymen's coffee crop, Ugandan businessman Andrew Rugasira decided back in 2003 that it was time for a new business arrangement.

Diane McCarthy and Ayesha Durgahee, CNN, 19 June 2013

Locking together aid, trade and investment for a prosperous future

A shift from Aid for Trade to Investment for Trade potentially has many implications. As researchers, we used to look at the consequences of aid, but with AfT appearing as part of a new agenda that includes its role in leveraging other flows, we also need to examine how the leveraged investments help to build trade capacity and how effective AfT is in leveraging other flows (rather than the other way around).

Dirk Willem te Velde, ODI, 5 June 2013

We Should Pursue A Policy of Trade Not Aid

A topic guide from the Institute of Ideas' Debating Matters Competition

Ed Noel, Debating Matters, 31 January 2013

Money may be tight, but 'smart aid' to developing countries can really work

Far from creating dependency, strategic assistance from the west can help developing countries to help themselves

Larry Elliott, Guardian, 13 January 2013

Trade policy campaign

Poverty, not food shortage, is the main reason for famine. Norwegian Church Aid and ten other organizations therefore advocate making it easier for poor farmers to earn money.

Norwegian Church Aid, 18 December 2012

How the well meaning West aids the despots

A review of Ten Weeks in Africa by JM Shaw

Charles Moore, Daily Telegraph, 1 October 2012

Give Us The Money

Bob Geldof and Bono have been the most prominent voices advocating on behalf of the poor. But have their concerts and campaigns lifted millions out of poverty?

Why Poverty?

Analysis: Unfair trade

With the current trading regime, poor countries have limited opportunity to use trade to achieve development. Most have liberalised rapidly and broadly according to recommendations and demands by the World Trade Organisation (WTO) and the international finance institutions. This gives very few opportunities to protect domestic markets, and poor countries usually have no chance of subsidising production in the same way as rich countries do.

Forum For Environment and Development

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