Panacea or Pandora’s Box?

Revisiting the systematic failures of UK foreign

aid to developing nations

Introduction:

As we have progressed into an era of global responsibility and co-operation,

economic disparities between nation states have emerged apparent. The UK is the only G7

nation attaining the aid target of 0.7% of GNI1. Claire Godfrey stated, “It’s a travesty that in

2019, so many world leaders are turning their backs on the people stuck at the bottom...

Thankfully, the UK isn’t one of those countries. 2” Indeed, the UK shows itself as a

predominant player on the global front of assisting developing nations grow. Along with

further data and empirical evidence we can now the more defined spectrum between

developed nations and underdeveloped nations. However, this paper looks to revisit the

extent of UK foreign aid and assess as to whether the UK foreign aid contributions are curing

the problems of developing nations or in actual fact moulding the key in unlocking Pandora’s

Box.

It is important to first off dissect the definition of a developing nation and to what

determinants allow us to define a state as such. Trebbi (2004) helps compartmentalise the

determinants of assessing development. Within his work, he brings about the idea of

economic growth under a two tier approach. He brings into light two distinctive categories:

internal and external development3. These distant branches of development will be important

to consider within this paper as this research paper will start by bringing into light the

systematic failures attributed to UK’s attempt of internal and external foreign aid. Internal
1

3
Rodrik, Dani, Arvind Subramanian, and Francesco Trebbi (2004), “Institutions Rule: The Primacy of Institutions
over Geography and Integration in Economic Development,” Journal of Economic Growth 9 (June): 131–65.
foreign aid tends to fall under the assistance of domestic institutions and activity of the

nation, whilst the external component of foreign aid entails the principles of trade and the

assistance of the migrant population. Though there tends to be a general consensus in that

foreign aid is axiomatic to the increase of development, many specialists bring up the idea

that more should be done in a more efficient way in order to spur on developing nations to

new heights. The main debate that this research question focuses

upon is the systematic failure of foreign aid policy. Arguably, the most apparent systematic

failure within UK foreign aid policy is the ever funding of global corruption. The Department

for International Development retorts this notion by stating, “UK aid only goes to trusted

partners to help those living in extreme poverty, not directly to the governments of the most

corrupt countries.4” However, this paper will prove to provide the contradictions of this

outlook, with evidence from sources such as John Hembry’s letters to the Daily Mail, which

he accounts, “I have bribed government ministers and officials of all grades, in the form of

cash payments, commissions, introductory fees, new cars, hospital treatment and so on for

more than 40 years. If I were not now retired I would continue to do so. 5” This perspective

pinpoints a vital systematic error within UK aid attempts, in that Fritz (2008) describes that,

“the relation between the customary and the morally right is therefore too flimsy to provide a

defence for foreign corruption. Moreover, the idea that ‘they’ would wish corrupt acts to take

place is also unjustified; corruption is widely unpopular even where it is common 6.” Indeed,

though much less documented, the payments to prop up corruption in the form of foreign aid

must be dealt with and will be further evaluated within this paper. Evidence from studies

conducted by the Independent Commission for Aid Impact (ICAI) will prove paramount in

further emphasising UK systematic failure within the provision of internal foreign aid.

Furthermore, this paper will look

4
https://dfidnews.blog.gov.uk/2020/01/04/uk-aid-support-in-corrupt-countries-2/
5
https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/2267.pdf
6
https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/2267.pdf
to at the external component of foreign aid7. Perhaps the less evaluated component of foreign

aid, Trebbi (2003) highlights the significance it holds within developing nations. Trebbi’s

foundations into the external determinants of development is dissected by Osang (2006

p.36)8who stresses on the importance of foreign aid with support of international trade and

ease of migration. Systematic failures of UK foreign aid is proving detrimental to the growth

of developing nations. This paper will then assess UK’s aid polices within the external sector

of foreign assistance for developing nations, utilizing empirical evidence from global cases

in underlining the current problems current UK foreign aid policy. Bassi (2011) highlights

these significance issues stating, “Current foreign aid decreases capital accumulation, hinders

growth in GDP per capita, and depresses exports.9” Though this statement provides an

extreme view on the failures of foreign aid, its ideology can resonate within the empirical

data that will be assessed within this paper. Following the

evaluation of the internal and external systematic failures of UK foreign aid, this paper will

draw empirical evidence from the cases of foreign aid arising within Pakistan and The

Republic of Korea, allude the possibility of easy emulation on a global spectrum. The main

hypothesis of this paper is that the failures in the provision of UK foreign aid to developing

nations is evident and more must be done in order to close Pandora’s Box of the poverty trap.

This paper will however, aim to provide a holistic argument with recognition of current

efforts with UK foreign aid and its attempts of modernising its efforts. However, it must be

stressed that much more must be done in improving the provisions for these developing

nations to thrive and prosper.

Background:

7
https://icai.independent.gov.uk/
8
https://www.dallasfed.org/~/media/documents/research/pubs/migration/osang.pdf
9
https://www1.essex.ac.uk/economics/documents/eesj/bassi.pdf
 Before diverging into the body of this research paper, it is important to discuss the

inauguration of the theoretical conception of foreign aid and its development into mainstream

economic policy. The conception of foreign aid can be first evident with the propping of

colonial land. Aid was once sent to support the colonised lands to “aid and develop

agriculture and industry in the colony or territory, and thereby promoting commerce with or

industry in the United Kingdom (Colonial Development Act, 1929) 10”. Following the end of

WWII and the catastrophic financial repercussions, coupled with declarations of

independence, UK colonial rule deteriorated from, “700 million to five million (Brown: 1998:

p.330)11.” Furthermore, the morality of colonial rule had been brought into question, with

social responsibility the forefront of new economic discussions.

Newly independent nations demanding reparations to quell the ‘anger of the

disposed’, bringing forth a new form neoclassical thought. Consequently, this resulted in a

global paradigm shift, spearheaded by Nelson’s neoclassical ideology, on the theory of the

Low Level Equilibrium Trap. The Low Level Equilibrium Trap was a concept which

discussed the quagmire of poverty within developing states. Within his concept, he modelled

that underdevelopment tended to perpetuate itself due to the natural forces that are

domestically generated to control economic growth, where it be supply or demand side

policies12. This led to the rise of foreign UK assistance in facilitating and contributing greater

than ever before, in the shape of the Colonial Development and Welfare Act (1940). This act

hoped to assist developing nations industries, as evident within Jamaica (financing the

installation of the University of the West Indies) and within South Africa (modernising the

agricultural production)13. This brought about the very start of basic aid into foreign

10
S1(1) Colonial Development Act, 1929
11
Brown, Judith (1998). The Twentieth Century, The Oxford History of the British Empire Volume IV. Oxford
University Press
12
Nelson, Richard R. Nelson ( 1956). "A Theory of the Low-Level Equilibrium Trap in Underdeveloped
Economies". The American Economic Review. P. 894–908.
13
https://www.britannica.com/topic/Colonial-Development-and-Welfare-Act
industries as opposed to just financial care packages.

From the 80s till today, the idea of more advanced foreign aid steps to

assist and prop up economic development within developing nations have arisen. Much of

UK’s more modern foreign aid policy has been notably derived from Solow’s concept of

capital accumulation. Solow’s growth model brought to light the need of external foreign

assistance, not just financial, to pacify natural systematic failures of developing nations,

which Nelson discusses, from both the supply and demand side of developing nations. He

models that, with the aid of foreign direct investment, coupled with global culture of

collaboration, developing nations are able to stimulate market growth and start up industries

to modernise from the title of a developing state 14. Ninety-one years on, the extent of how

much success UK aid has had to developing nation has been scrutinised intensely and

methods on the provision of more modern ways of foreign aid has taken flight.

Research Aim:

To evaluate and assess the systematic failures of foreign aid to developing nations, whilst

maintaining a focus upon UK’s actions as a predominant reference within the paper.

Research objectives:

Evaluate the systematic failures of foreign aid prevalent within UK policy

Measure the strengths and weaknesses of current UK foreign aid policy (internal vs external)

Compare current recipients of foreign aid to that of UK foreign aid recipients

14
Suggest further, innovative methods of the provisions of foreign aid to developing nations

(micro-finance, more transparent watchdog agency, long termism/self-determinism, private

sector development’ (PSD), A differentiated, adequately resourced strategy for each recipient

country -} collaboration with ODA and NGO’s for efficieny and direct target of nations

issues (switzaland and sweedan)

Literature Review

Much research has been attributed to the analysis of foreign aid and results it has yielded

have been mixed throughout. The literature academia analysed within the paper will tend to

dissect foreign aid into two distant components; external and internal aid. Both fall under the

umbrella term of foreign aid, yet consist of different aspects of aid. Osang (2006) evaluates

and deconstructs both the external and internal determinants of developments and finds that

his, “findings provide evidence for a link between external measures (migration and trade)

and per capita income.” His outlook on the importance of external determinants of

development is one less explored by most, making his research essential in providing two

distinct aid compartments, which scholars tend to group together.

Another overarching debate within the scholars within this research paper is

Theoretical Framework

As previously mentioned, due to the many factors and sub factors contributing to the

development of nations, this paper will first evaluate the theoretical lens assessed from

Asongu & Jellal’s (2016) work on Foreign Aid Fiscal Policy: Theory and Evidence. Asongi
(2016) offers a contradictory perspective to this papers narrative, by affirming the

justification of the positive effects of current foreign aid procedure within developing nations.

Asongu (2016) paper supports the endogenous growth theory, in supporting the,

“instrumentality of foreign aid in stimulating private investment and fixed capital

formation.15” Asongu and Jellal (2016). Their paper provides a detailed assessment on the

scope of successful foreign financial aid packages within developing nations, providing

detailed empirical evidence. Their work also revolves around the incentive of the reduction of

foreign taxation within developing nation, to attract foreign direct investment. They postulate

that, “the positive effect of aid reduces the burden of the taxation system on the private

sector, which ultimately leads to economic growth in poor countries. (Asongu et. Al, 2016

p.280)” However, the main framework of this paper, on the success of financial foreign aid,

fails to take into account long-term repercussions. Much of the work can be deemed to ‘short-

sighted’ and fail to take into account the dependency trap. Clemens et, al (2012) finds that

nations with dependency rates over 15% can directly procure negative long term effects

within developing nations16. Both papers, among others, will help address the first research

question on the systematic failures of UK foreign aid. Furthermore, when assessing the data

on foreign aid, this paper will dive deeper into longitudinal data to fully evaluate the long

terms success and failures of UK foreign aid to developing nations.

Another novel which will assist in formulating my theoretical framework for this research

paper will be derived from Foreman’s work on Aiding and Abetting (2013) 17. Foreman

provides support on the predominant internal determinant of systematic foreign aid failure.

Within his work he brings to light the idea of developing nation’s bad management of foreign

15
https://www.researchgate.net/publication/298722717_Foreign_Aid_Fiscal_Policy_Theory_and_Evidence/
citations
16
Clemens MA, Radelet S and Bhavnani R (2012) Counting Chickens when they Hatch: Timing and the Effects of
Aid on Growth, The Economic Journal, 122(561), 590-617.
17
Jonathan, Foreman, (2012) Aiding And Abetting: Foreign Aid Failures and the 0.7% Deception, London:
Institute for the Study of Civil Society p.19
aid, suggesting that aid must be remitted in more transparent measures to avoid corruption.

Within his paper he further stresses on the ability developing nations have on the

manipulation of the release of data from just where the financial goes, bringing to light the

5,300 ‘ghost schools’ that should be physically existing if the intended UK foreign aid was

allocated to its correct domains18. His work will prove essential within this paper to correlate

with this research papers primary theoretical framework on the internal failures of UK

foreign aid. The use of both Osang (2006) and Foreman’s (2013) works will prove essential

in assisting with addressing both the first and second research questions in helping analyse

and measure the systematic failures of internal and external determinants of UK foreign aid

Following this evaluation I will aim to provide a comparative component within this paper on

successful foreign aid policies from global donors and compare their activities to that of the

UK. With this section, it will prove vital to utilise a case study from both the UK and a global

donor with similar initiatives, but ulterior methods to fully assess the systematic methods of

the UK to that of a global donor in the results of the foreign contribution. Khan et al. (2007)

paper on ‘Foreign Aid—Blessing or Curse: Evidence from Pakistan’ is a key study that will

be assessed within this paper. Khan asserts that, “the results show negative and insignificant

effects of foreign aid on the growth at the aggregate as well at the disaggregate level.

(p.215)19” This paper will also incorporate the systematic failures that have led to minimal

growth within Pakistan from UK foreign aid to highlight the significance of the research to

society. Alternatively, this research paper will lay emphasis on a ‘success story’ of a foreign

aid recipient, to provide empirical evidence that foreign aid can assist in developing and, in

time, out of a poverty trap. The main case yielding success from foreign that will be analyse

is the case of South Korea. Yoon (2014) offers an ‘Empirical study on the impact of foreign

18
Jonathan, foreman, (2012) Aiding And Abetting: Foreign Aid Failures and the 0.7% Deception, London:
Institute for the Study of Civil Society p.19
19
https://www.pide.org.pk/pdf/PDR/2007/Volume3/215-240.pdf
aid in Korea’s economic and human capital development20’. Within this study she draws to

attention Jaewoo’s (2006) economic growth model, which evaluated the determinants behind

South Korea’s economic growth. With his paper he drew to attention that, “that concessional

loans had significant impact on economic growth whereas grant aid had no significance.” His

model was developed with utilising Ordinary Least Squares method21 in order to incorporate

the parameters of GDP and the impact that foreign aid had upon it. He also found the

significance of human capital development within his studies and the direct correlation it had

during the course of 1965-199022. The theoretical framework of Korea’s human capital

development directly ties into Solow’s theory of capital accumulation and will be an

important theory within the narrative of this paper. Khan and Yoon’s works will be

fundamental within this paper for the provision on longitudinal empirical evidence on the

successfully comparing the success stories of Korea in receiving foreign to the Pakistan’s

inability to develop with UK foreign.

Following the evaluation of the systematic failure of foreign aid I will look to provide

solutions in the hopes of repairing UK’s foreign aid output to developing nations. The

predominant theory of repairing foreign aid will align with the narrative of Calderon (2006). 23

Within his work he asserts that, “not only is reviewing foreign aid is a must for the future of

the least-developed countries but also posit that microfinance is a complementary and

financially sustainable approach that creates better incentives for development.” Indeed,

Calderon (2006) provides evidence within his work on the support of micro-finance and

20
https://archives.kdischool.ac.kr/bitstream/11125/30505/1/Empirical%20study%20on%20the%20impact
%20of%20foreign%20aid%20in%20Korea%27s%20economic%20and%20human%20capital
%20development.pdf
21
https://archives.kdischool.ac.kr/bitstream/11125/30505/1/Empirical%20study%20on%20the%20impact
%20of%20foreign%20aid%20in%20Korea%27s%20economic%20and%20human%20capital
%20development.pdf
22
https://archives.kdischool.ac.kr/bitstream/11125/30505/1/Empirical%20study%20on%20the%20impact
%20of%20foreign%20aid%20in%20Korea%27s%20economic%20and%20human%20capital
%20development.pdf
23
offers a solution in repairing the systematic failures of the UK’s foreign aid mechanism.

Another important theory I will look to address is the dependence theory and how developing

nations can avoid falling into this quagmire. A key factor in stalling the internal dependency

trap of developing nations will be the provision of management consultation as a means of

foreign aid. Efreituei’s (2006)24 paper on NEPAD: Emerging Conditions Impacting The

Implementation Process correlates with a predominant theme of dependency theory and the

internal determinant of development. Within his paper, he dives into saying that, “The local

NGO’s must endeavour, as a rule, to embark on training so as to improve management

techniques …and in doing so aid in eradicating dependence with the resources at their

disposal in relation to their developmental objectives.” I will assess Efreituei’s work and use

it to derive viable solutions the UK may hope to emulate to repair the systematic failure of

UK foreign aid, highlighting the significance of microfinance. Moreover, another piece of

work that will assist me in providing solutions to repair the systematic failure of UK foreign

aid will be Moyo’s (2009)25 study on Why Aid is Not Working and How There is a Better

Way for Africa. draws attention to the direct correlation between poverty and corruption.

Within her book, Why Aid is Not Working and How There is a Better Way for Africa she

deconstructs a direct link, between foreign aid and corruption, postulating that, “foreign aid

leads to corruption, which results in stalled development and corruption leads to the

ineffective use of foreign aid, which results in stalled development, rather than

improvement.” Within her work Moyo (2009) further delves into quantitative data, with

responding with astonishing numbers that, “eighty five percent of foreign aid is utilised for

purposes other than allocated with the most common outlet to corrupt families and

politicians. Quantitative data within my paper will help signify just how far UK foreign aid

has deep systematic flaws and the necessity to address these concerns.

24

25
Hence, I will look to stress on my own theory of suggesting UK foreign aid look to diverge

away from fiscal support and look to offer long term support in the form of consultation and

‘perfect information’. The idea of perfect information isn’t a new notion to aid systematic

failures of aid provision within developing nation, as Williamson (2009) 26 provides a crucial

study into “Exploring the failure of foreign aid: The role of incentives and information.”

Within this study she affirms that, “Information is discontinuous, dispersed across many

individuals, and often contained in inarticulate forms.” Indeed, a vital, less discussed factor

behind failure of foreign aid would be lack of information and local knowledge, with people

within developing nations needing full information before being able to progress. Tying in

my paper, Economist Hayek reinforces the natural local knowledge problem theory into

justifying the inadequacy of command nations amassing social wealth, due to the difficulty of

one minute group amassing all the necessary data to organise a nation efficiently. Hayak also

procured an important notion, in the significance of decentralised actors can prove to be

efficient in society are able to procure social efficiency 27. Furthermore, I will look to stressing

the importance the foreign aid on education and the need to set precedents on financing

foreign aid to education over government and civil society. Within a 2017 report conducted

by the Department of International Development it was found that, 13.2% of UK’s annual

“ODA28 budget contributed to aid within government and civil society 29 whilst 8.9% went

into education30.” This data helps justify that assistance within educational sectors should be

improved. Tiluk (1988) supports the notion of providing foreign aid in the shape of education

and that aid in this sector will yield progressive reparations to the “bad politics” that foreign

aid brings about. He further stresses on the positive correlation of education and economic

prosperity. He argues that the fortification of education aid can lead to an increase of GDP,

26

27

28
Official development assistance
29
Includes public policy, human rights, conflict prevention and resolution, and peace and security.
30
along with equalling out social economic disparity, stating that, “it is prevalent in society that

education aid has contributed to a higher marginal return on stock than the means of cash

considerations, credit lines and debt relief.31”I shall be attributing the provision of education

and perfect information as a fundamental component in assisting the UK efficiently

contribute to foreign aid.

Internal vs external aid

Development vs Modernisation (pre requisite before the content

Systematic failures of foreign aid prevalent within donors

I) NGO’s: modern colonial doctrine

In the past few years there has been a dramatic rise in the aid from non-government

organisations. Brokington and Banks both bring to light the exponential growth of UK

NGO’s. They go to suggest that, “despite mergers and acquisitions, numbers have been

increasing not decreasing over time.32” They go to discuss that alongside the increase in

NGOs there is also an exponential growth in expenditure over the years despite the stigma of

a “rising tide of nationalism, parochialism and suspicion of, not care for, distant strangers 33.”

Indeed, this rise of NGO affluence appears to be prevalent on a global scale and can be

attributed to a more modernized sense of co-operation and the further understand of global

contribution. To many, NGO’s provide a sense of aid and assistance to nations in dire need.
31
Tilak, Jandhyala B. G. 1988. “Foreign Aid for Education.” International Review of Education 34 (3): 313-335
32
https://oxfamblogs.org/fp2p/the-evidence-suggests-that-support-for-uk-development-ngos-is-actually-
growing/
33
https://oxfamblogs.org/fp2p/the-evidence-suggests-that-support-for-uk-development-ngos-is-actually-
growing/
However, though successes of NGO’s are evident, the mirroring of a colonial doctrine may

not be difficult to see. The predominant ideology behind the activities of colonialism stems

from Western powers beliefs on a nation’s lack of modernism and ‘godly right’ to assist and

educate these unmodernised & backward states. Though religious reasoning has dispersed

from state activity, Western states have valid means in assessing the vulnerability of states

requiring aid and granting aid on the belief of their own assumptions. Having those deep

rooted assumptions within foreign aid results in a vested interest based approach when

utilising NGO’s. Many NGO’s look to modernising the nation as opposed to developing its

people. Manji & O’Coil discuss the discreet aid delivered by missionary and voluntary

organisations within British colonial era. They go on discuss that the inauguration of certain

NGO’s, such as the Woman’s Association and the Christian Council of Kenya, as a means to

protect colonial interests not for the betterment of the indigenous population. Indeed, many

theorists stress on the systematic problems that arise from the exponential growth of NGO’s

within developing nations.

Another key argument raised to address the failure of UK’s NGO activity is the environment

made from the normalised humanitarian aid system. Jayawickrama (2018) postulates that the

current UK humanitarian system as a continuation of the previous colonial mission arguing

that, “the current contemporary humanitarian system is part of the global intervention to

change the social, cultural, economic, political and environmental architecture of countries

without the consent of the people34.” A prime example of this is prevalent within the case of

Pakistan and the aid projects of NGO’s. Foreman (2012) provides a vital foundation

emphasising the systematic failings of NGO’s within Pakistan. Foreman deconstructs the

description NGO’s use to describe development as a, “biological construct that can resonate

34
https://www.aljazeera.com/indepth/opinion/humanitarian-aid-system-continuation-colonial-project-
180224092528042.html
into sounding a lot like colonial paternalism. 35” Rieff (2002) mirrors Foreman’s stance on the

colonial prowess of NGO’s affirming that, “When one goes to a developing country where

the humanitarian role is vital, the colonial atmosphere is unmistakeable. Humanitarians live

in houses previously occupied by cabinet ministers or at least by the richest person in the

village.36” Thus, when establishing a fundamental systematic failure within foreign aid policy

it is important to suggest the structures of NGO’s create an environment of colonial

paternalism and prove detrimental to the assistance of developing nations.

II) Dependency Trap

Foreman (2012) also illuminates the dependency trap many nations struggle to escape from.

He postulates that, “the ‘aid-dependency model’ fostered by the aid industry over five or six

decades requires that Africa be fundamentally kept in its perpetual child-like state 37.” As

earlier mentioned, the dependency trap focuses upon a failure within the internal contribution

of foreign aid. Many developing nations tend to rely upon foreign aid in order to spur

economic activity and provide government revenue alternatively from the taxation of its

people. Many scholars come to the consensus of the necessity of UK foreign aid to maintain

positive economy activity and spur growth for developing nations. Asongu & Jellal (2016)

stand firm on the importance of the Big Push Theory as a means for a developing nation to

avoid falling into a dependency trap38. This theory advocates the need of large sums of

internal aid via substantial foreign direct investment to ‘push’ nations through the economic

costs of becoming self-determined. In other words, it follows the belief that there is a

35
Jonathan, Foreman, (2012) Aiding And Abetting: Foreign Aid Failures and the 0.7% Deception, London:
Institute for the Study of Civil Society p.77
36
Rieff, D., A Bed for the Night, p.81
37
Jonathan, Foreman, (2012) Aiding And Abetting: Foreign Aid Failures and the 0.7% Deception, London:
Institute for the Study of Civil Society p.77
38
https://www.researchgate.net/publication/298722717_Foreign_Aid_Fiscal_Policy_Theory_and_Evidence/
citations
correlation between large aid receipts and economic growth within developing nations.

However, data provided by Clemens provides an alternative perspective. Within his work he

finds that, “aid appears to have a non-linear effect on growth, and there may be limits on the

degree to which even large aid receipts can further.39” Clemens’s empirical evidence on the

matter looks to eliminate the idea of depending on donor nations to ‘pay’ developing nations

out of dependency. He manages to prove that accepting these large sums of internal financial

aid in turn just creates a natural quagmire, thus, shedding light on a key systematic failure UK

foreign aid policy pertains in assisting developing nations.

III) Short-termism

With the United Nations setting a 0.7% target for developed nations to spend of their GNI

into developing nations, spending on foreign aid has risen to an all-time high.40

Figure 1 helps signify

UK’s intention to

maintain this rate of 0.7%

of its GNI into foreign

aid and its plans to

continue providing

ODA’s to developing

states for the foreseeable future. However, with all this in mind, the efficiency of the

allocation and utilization of this UK foreign aid is widely contested. Renzio (2016) draws to

attention the systematic failure of short-termism and the fact that, “results can undermine
39
Clemens MA, Radelet S and Bhavnani R (2012) Counting Chickens when they Hatch: Timing and the Effects of
Aid on Growth, The Economic Journal, 122(561), 590-617.
40
https://www.ifs.org.uk/uploads/publications/bns/BN204.pdf
efforts to build the institutions needed for the long-term sustainability of development

outcomes.41” Creating short-term goals may prove crucial when assisting with immediate aid,

such as natural disasters or vital financial care packages however, when dealing external aid,

having a structured long term plan ensures efficiency. External aid in the form of foreign

policy tends to be less prioritized within developing nations, with tariffs and quotas set to

limit economic activity for these developing nations. Feeny et al. (2019) discusses the lack of

trade openness within recipients of foreign aid with donors, stressing that donors tend to

prioritise short term goals in financial aid and assistance and not long term development of a

nations industry42. Alternatively, Hühne et al (2013) discusses the effectiveness of Aid for

Trade and the significance it holds in supporting long term bilateral assistance. Within his

work he asserts that, “, AfT has the potential to increase trade by promoting investment and

economic growth in the recipient country.43 As a result, the short termism approach applied

by UK policy, lays emphasis on another vital systematic failure within their foreign aid

approach and further action is needed to ensure external aid via assistance of trade and

migration is crucial.

IV) Corruption central planning

Arguably the most prevalent systematic failure within foreign aid is the contribution to

corruption. Much research has been conducted on the matter with countless of cases

supporting this activity. The UK’s Department of International Development continuously

41
https://www.odi.org/sites/odi.org.uk/files/resource-documents/10805.pdf
42
https://link-springer-com.iclibezp1.cc.ic.ac.uk/content/pdf/10.1007/s10290-019-00351-4.pdf
43
plays down its contribution to corruption stating that, “UK aid only goes to trusted partners to

help those living in extreme poverty, not directly to the governments of the most corrupt

countries.44” Though the intention to maintain aid corruption free is evident, the success in

surveying and preventing corruption has failed. Foreman (2012, p.g167) explains that, “In the

recent past DfID officials have actually undermined efforts to publicise and combat

corruption in countries that are beneficiaries of much UK aid, even where there is evidence

that local governments are stealing or otherwise misusing that aid. 45” Consequently, the

activities of corruption have become an ‘accepted’ stage of foreign aid and brushed past

many situations of corruption prevalent. From the lack of severity in consequence and

communality of ‘paying the big man’ this corruption culture becomes a systematic normality

within UK foreign aid and proves detrimental in the efficiency of Official Development

Assistance.

Chapter II: Strengths and weaknesses of current UK foreign aid policy

44
https://dfidnews.blog.gov.uk/2020/01/04/uk-aid-support-in-corrupt-countries-2/
45
Jonathan, Foreman, (2012) Aiding And Abetting: Foreign Aid Failures and the 0.7% Deception, London:
Institute for the Study of Civil Society p.167
 I) The UK has been a global pioneer in foreign aid to developing nations. As earlier

mentioned, its maintenance to continue paying the 0.7% benchmark of its GNI to

foreign aid rivals all within the Development Assistance Committee46.

The above figure helps to exhibits UK’s continuous influence within foreign aid on a global

spectrum. Warwick (2017) supports the above data and stresses UK’s foreign aid

contributions to rival any nation within the DAC. Within his report The Changing Landscape

of UK Aid he further expands on this saying, “the most recent OECD DAC peer review of

UK international development policy identifies the UK as leading in shaping the global

development agenda.” Furthermore, UK foreign aid has provided crucial assistance to many

nations going through sudden catastrophes. The Humanitarian Emergency Response Review
46
https://www.ifs.org.uk/uploads/publications/bns/BN204.pdf
(HERR) provides a deep analysis on UK response to global disasters, with direct reference to

the Haiti floods. Within the report, the DFID stresses on the UK push for global collaboration

of developed states and the need of unification to assist developing nations. Within the paper

the DFID affirm, “We will use our multilateral aid to make this happen. The UK is firmly

committed to the multilateral system.” The constant push for global collaboration within UK

foreign aid policy is mirrored with being a leading signatory within the UN led initiative ‘The

Grand Bargain’. The Grand Bargain is also prime example affirming the UK as being

proactive donors of foreign aid. The Grand Bargain is an agreement which lists 51

commitments between NGO’s donor states. The 51 mutual commitments group between ten

streams which all aim to improve foreign aid efficiency and effectiveness. Though Hough

(2018) deconstructs the initiative as deeply flawed with, “a lack of clarity on the collective

end goal; differing views on how the Grand Bargain should relate to country-level operations;

and a lack of visible leadership and engagement at the political level. 47” the intention is clear.

The evidence goes on to emphasise that the UK is a global pioneer of humanitarian assistance

and do have the intention with UK foreign aid policy to make a genuine difference among

internal assistance for developing nations.

II) Internal weakness of UK foreign aid

Alternatively, a fundamental internal weakness within UK foreign aid is the dysfunction of

formal institutions. Kolstad (2008) express this within his research, which he explains the

natural dysfunction within internal assistance as, “principally explained by their suffusion

with informal norms and practices, such as personalism, clientelism and other forms of social

exchange and obligations.48” Indeed, much of UK’s internal assistance has developed a sense

of normalcy when dealing with corrupt business activities. Kolstad (2008) also divides

corruption to two distinct groups being, ‘political and bureaucratic’. This division will be
47
https://www.odi.org/publications/11135-grand-bargain-annual-independent-report-2018
48
https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/2267.pdf
important to consider within this paper as dealing with UK systematic failure of foreign aid

will need to address both components of corruption.

Furthermore, another systematic failure within the provision of foreign aid is the naturalistic

dependency trap developed by UK internal aid. Efreituei (x) provides a detailed analysis on

how the dependency trap produces a deep systematic failure on development. Within his

work he cities Liou (2003, p.g 370) on her thesis that, “the problem of many developing

nations are related to a situation in which these countries downgrade their central roles of

their government in the development processes to a dependent and responsive entity 49.” In

other words, when a nation is in the development phase by assigning foreign entities

responsibilities and powers within modernisation, the nation becomes responsive and reliant

on the entity supporting the central role and not the national government. This tends to

generate a structural economic dependency, following foreign advice on economic activity,

due to advice or aid conditions, which better conditions for the donors yet may worsen

recipient’s position. To add, Efreituei (x) also explains how this dependency trap for

developing nations can be attributed to the compliance of the capitalist class of both donor

and recipients. He affirms that, “the continued economic dependency, under-development,

and the consequent marginalization of the African continent is attributable through the

compliance of the local and international capitalist classes. 50” This theory explained by

Efreituei on the dependency trap helps signify the necessity of self-determination to provide

solutions on the systematic failures naturally developed from the foundations of a

dependency trap.

III) External strength of UK foreign aid

49

50
Looking at UK on the external front of foreign aid we can see the success of trade and

migration policy. External aid tends to fall within multilateral trade agreements and aid-

migration links between donor and recipients. When discussing external aid, a predominant

theme assessed is aid-for-trade initiatives to spur economic activities. The World Trade

Organisation deconstructs AfT as a, “method in helping developing countries, in particular

the least developed, to build the trade capacity and infrastructure they need to benefit from

trade opening. It is part of overall Official Development Assistance (ODA) — grants and

concessional loans — targeted at trade-related programmes and projects. 51

” Indeed, the

success of UK’s external aid, on the outlook of trade, should help build the export potential of

developing countries. The current initiatives from UK policy is pushing for all to, “reap the

benefits of global trade, and the impoverished engage with domestic and international

markets in a way that benefits them. 52” This positive outlook on the external incorporation of

trade to provide aid in the means economic activity and job provision does represent a

positive aspect of the current UK foreign aid policy activity.

IV) External weakness of UK foreign aid

On the other hand, UK aid in the mechanism of multilateral trade, creates an imperfect trade

off. Having perfect information and an abundance of capital, donors tend to trade externally

with the intention to maximise profits, thus paying for labour under market value as well as

enforcing vested interests within trading negotiations, such as making the provision of aid

mutually exclusive with multilateral trade. Within Feeny’s (2019) work on ‘Donor motives,

public preferences and the allocation of UK foreign aid’ he found that, “donor interests and

absorptive capacity respectively as the most important attribute for choosing countries to

51
https://www.wto.org/english/tratop_e/devel_e/a4t_e/a4t_factsheet_e.htm
52
https://assets.publishing.service.gov.uk/media/57a08b2c40f0b652dd000b46/ODI-WP313.pdf
support with trade for aid.53” This evidence helps pinpoint the theory that beneficial trade

negotiations are prioritised on donor’s interests and not the recipient’s needs, highlighting the

systematic failure of external UK aid towards developing nations. Furthermore, Burnside and

Dollar (2000) bring about a theory on the allocation of trade agreements and UK aid to

nations more capable, “of putting it to good use, not to recipients who need it. 54” They go on

further to elaborate that, “aid is more effective in countries with sound macroeconomic,

making macroeconomic policy environment a vital factor that the UK consider in getting the

most ‘bang for their buck.55” This evidence further displays the systematic failure of UK

foreign aid, in providing preferable trade agreements on the vested interest of maximum

profits, not to assist on the betterment of the recipients

Compare current success recipients of foreign aid to that of UK

foreign aid recipients

When evaluating systematic failures and successes within UK foreign aid activity it is

important to assess previous recipients. The case of Pakistan proves to be an overarching

failure on the foreign aid front 56. The fact that Pakistan receives the most aid from the UK yet

still boast, “Literacy rates of around 50 percent and other social indicators, such as

employment, health and education etc., not presenting an encouraging picture 57” emphasises

just how much UK assistance has failed. Khan and Ahmed (2007) provide a detailed report

on Foreign Aid—Blessing or Curse: Evidence from Pakistan, assessing UK aid on a

theoretical and empirical front. The reports predominant theme supports this papers narrative

53
https://link-springer-com.iclibezp1.cc.ic.ac.uk/content/pdf/10.1007/s10290-019-00351-4.pdf
54
https://link-springer-com.iclibezp1.cc.ic.ac.uk/content/pdf/10.1007/s10290-019-00351-4.pdf
55
https://link-springer-com.iclibezp1.cc.ic.ac.uk/content/pdf/10.1007/s10290-019-00351-4.pdf
56
https://www.pide.org.pk/pdf/PDR/2007/Volume3/215-240.pdf
57
https://www.pide.org.pk/pdf/PDR/2007/Volume3/215-240.pdf
of the UK’s current foreign aid policy creating a dependency trap and benefitting a few

compartments within Pakistan’s economy58.

The

above diagram represents the disbursement of foreign loans since 1990 and helps signify the

lack of contribution of private loans into sunrise industries and look to deep rooted

foundation of corruption. With all this contribution into the construction sector Khan &

Ahmed (2007, p.g 223) found that, “ Physical infrastructure such as irrigation, electricity,

roads and highways, telecommunications, railways, and other capital assets have been poorly

maintained and have neither been replaced, nor expanded to keep up with the growing

demand.59” This helps represents the large failure the UK among other lenders have had in

regulating loan payments with much reported missing and unused in the betterment of

Pakistan. The fact that there has been a surge in aid in the form of loans have led to

exasperated debt for the nation due to the fact that rather than contributing to national

prosperity, “aid has served the vested interest of a small influential group of the society and

the political elite in the government circle and has limited efficiency of state projects.60”

58
https://www.pide.org.pk/pdf/PDR/2007/Volume3/215-240.pdf
59
https://www.pide.org.pk/pdf/PDR/2007/Volume3/215-240.pdf
60
https://www.pide.org.pk/pdf/PDR/2007/Volume3/215-240.pdf
Another vital component to analyse when assessing the case of Pakistan would be the agenda

of dependency. The provision of aid from the UK with grants and payments during the 90s

and 00s have led to a period of inefficiency with much of the projects funded by the UK

containing conditions of services and equipment purchased from them. By not having the

specialists on the operations of managing vital projects have further pushed Pakistan into a

dependency trap. Furthermore, by allocating these projects to external contractors it limits the

circular flow of income within the country as well as specialists on projects, resulting in lack

of efficiency of local project leaders to that of foreign contractors. Khan and Ahmed (2007

p.g 235) expand on this notion postulating that, “, foreign contractors are paid kickbacks on

foreign added projects which encourage and promote the culture of corruption, weaken state

institutions and increase the costs of projects.” This empirical case of Pakistan helps signify

the failure of current UK foreign aid efforts and emphasises the need to promote self-

sustainability and transparency to mending the systematic failures.

On the other hand, the case of Korea is a proven ‘success story’ with their ability to become

one of the few nations to diversify out from a foreign aid recipient to donor. A predominant

feature with the exponential growth of Korea was its application of foreign aid into

education. Hultberg (2017) breaks down the inauguration of such a strong education system

under its ability to, “diverse foreign aid into the support of science and engineering

departments across all state universities.61” Furthermore, long-term planning of the Five Year

Economic Development Plan, which allocated foreign aid into all industries of Korea,

directly co-ordinated with the government’s education plans. The development plan aimed to

educate domestic manpower crucial for national development, leaning away from foreign

industries.

Total number of students: Korea’s GDP62

61
https://www.tandfonline.com/doi/full/10.1080/23322039.2017.1389804
62
A correlation between the rise of the nation’s GDP and number of students, as represented

above, further provides the empirical data needed to support the success that education had

on the advancement of the nation’s GDP.

Furthermore, Korea look to be firm advocators of innovation and technology, in particular

with start-ups. Korea’s innovative Centres for Creative Economy and Innovation (CCEI)

scheme helps combine domestic start-ups with large conglomerates, assisting each other with

operations. Jung, (2017) goes on to explain how, “major conglomerates such as such as

Samsung, Hyundai Motor and SK help provide resources to smaller companies, support SME

innovation, and local industries,63” thus, re-enforcing the ideology of self-determination. In

relation, to private sector development, Korea’s application of microfinance has also allowed

low income start-ups to prosper and gather funds needed to progress. Opening the worlds’

first government-led microfinance program with the inauguration of Smile Microcredit Bank

(SMB), South Korea has advanced leaps and bout the past 60 years. Kim (2018) goes on to

further explain the mechanism behind the program, explaining, “The program promised to

provide 8.45 billion USD over the next five years for unsecured loans to low-income

households through partnerships with the private sector. With the partnership of several

financial institutions the program offers large loan payment schemes for low-income

63
households to start businesses at a ceiling interest rate of 10.6% per year. 64” Though it is

evident that Korea has now the progressed to a ‘developed nation’ it still remains important

to dissect its growth from, “one the poorest countries in the world into the world’s top 15 th

economic stronghold.65” The blueprint evaluated with Korea’s economic growth will prove

important in guiding UK foreign aid policy to mirror and assist developing nations grow and

repair systematic failures of past blunders.

Solutions in repairing systematic failures of UK foreign aid in developing

nations

Upon all that data collected, it is evident that there are a multitude of systematic failures

within UK. Now it remains to be seen; what solutions may be viable in repairing the

systematic failure of UK foreign aid to developing nations. From evaluating the success of

Korea, the notion of the encouragement of education

I) micro-finance,

II) more transparent watchdog agency,

III) long termism/self-determinism,

IV) private sector development’ (PSD),

Conclusion

64
http://www.ijtef.org/vol9/585-BR0013.pdf
65
http://www.koreaneducentreinuk.org/wp-content/uploads/downloads/Education_the-driving-force-for-the-
development-of-Korea.pdf
 I) Incorporate within conclusion: all nation different with diff

approach on each and more tight secure collaboration of

NGO and national aid

i. A differentiated, adequately resourced strategy for each recipient

country -}

ii. collaboration with ODA and NGO’s for efficieny and direct target of

nations issues (switzaland and sweedan

It is evident within their research with the narrative of large systematic flaws with Analysing

UK colonial policy to foreign aid, both O’Coil and Manji 66

66
Firoze Manji and Carl O'Coill, The Missionary Position: NGOs and Development in Africa International Affairs
(Royal Institute of International Affairs 1944-) Vol. 78, No. 3 (Jul., 2002), pp. 570