Media Releases

Foreign aid has not achieved its goals

Montreal, February 13, 2008 – Canada’s aid programs need to be radically changed to respond effectively to new global conditions in an era of failed or failing states in the poorest parts of the world. Unfortunately, overseas development assistance is dying under the weight of its own red tape. This is the essence of the message to be delivered today by John Watson, president of the humanitarian organization CARE Canada from 1987 to 2007, in a speech presented by the Montreal Economic Institute (MEI) in collaboration with the Montreal Council on Foreign Relations.

Mr. Watson will examine the crisis of confidence involving the current international aid model and will propose structural changes for improvement, placing greater emphasis on market mechanisms led by the business and voluntary sectors rather than by government bureaucracies.

The speech, titled “Foreign Aid: What Should We Do?,” will be given on Wednesday, February 13, from 11:45 a.m. to 2:00 p.m. at the Marriott Château Champlain Hotel. Mr. Watson will meet with journalists from 2:00 p.m. to 3:00 p.m.

Publication of a study on the same topic

At the same time, the MEI is releasing an Economic Note titled International Aid: How to Encourage Development in Poor Countries? Nathalie Elgrably, the study’s author, states that “international aid has not met its goals. Even though African countries have received $830 billion in the last five decades, most countries in sub-Saharan Africa have experienced a drop in living standards.”

To start with, much of the aid that has been provided does not reach the communities most in need and instead is diverted due to corruption. Moreover, governments often invest in projects that are not financially viable and thus do not contribute to sustainable prosperity.

Economic freedom and a greater opening to trade are essential to development, and it is these aspects that Canada’s international assistance should encourage. Advanced countries and developing countries alike should eliminate protectionist measures, especially in agriculture. There is a need to establish an economic context that is favourable to private enterprise and to commercial exchanges that enable everyone to show a spirit of initiative, to enjoy the fruit of their success and to assume responsibility for their failures.

East Asian countries such as Singapore, Taiwan and Kong have succeeded in emerging from misery by liberalizing their international trade. In 1960, South Korea was as poor as Ghana or Zambia. Today, it is among the wealthier countries and devotes a portion of its GDP to development assistance.

The promotion of healthy governance is also needed to strengthen institutions, make public spending transparent and improve legislative and judicial functions. Microcredit should be encouraged as well as private sector participation in the construction of infrastructure. Above all, there is a need to guarantee the rule of law, particularly the application of clearly defined property rights.

The Economic Note, titled International Aid: How to Encourage Development in Poor Countries?, was prepared by Nathalie Elgrably, an economist with the Montreal Economic Institute.

– 30 –

Information and interview requests: André Valiquette, Director of Communications, Montreal Economic Institute, Tel.: 514 273-0969 ext. 2225 / Cell: 514 574-0969 / E-mail: avaliquette (iedm.org)

Back to top