Foreign Aid and Development
(Editor's note: This article is based on testimony given by Bryan T. Johnson before the Senate Foreign Relations Committee, United States Senate, Washington, D.C., on Sept. 19, 1996. Proponents of foreign aid often argue that the program has three major goals: 1) to promote economic growth, 2) to promote U.S. foreign policy goals, and 3) to promote U.S. exports. The first article presented on this page took on foreign policy goals mission. This article addresses the economic development mission. It is important to realize that the author does not endorse the specified goals as stated in AID's mission documents, or espoused by its director, J. Brian Atwood. They are taken on in this series of articles to demonstrate aid's failures at its stated objectives. If you would like to learn more about my calculations and source data, please e-mail me.)
Thank you Mr. Chairman for inviting me to testify on economic freedom and economic development. The views expressed here are my own and do not necessarily reflect the views of the Heritage Foundation.
I have long considered economic freedom the key to economic growth in less developed countries. Unfortunately, economic freedom has not been given the attention or credit it is due by the development community and the Agency for International Development. Make no mistake, I believe that economic freedom is the solution to economic development. The facts indicate that poverty is largely a condition imposed on people by ill-conceived and repressive economic policies, not a condition resulting from chance. While poverty may be present early in a country's history, economic repression seems to exacerbate it. The facts also indicate that no amount of economic aid can make up for the conditions that result from economically repressed markets. The Index of Economic Freedom, for which I am a co-author, demonstrates that economic freedom is one of the most important factors in promoting economic growth and prosperity in less developed countries. This publication further demonstrates that instead of helping poor countries lift themselves out of poverty, development aid often impedes their economic growth, while damaging their fragile economies.
Development has the potential of doing great harm to a recipient country and it is not necessary for development. It is economic freedom, not aid that matters most to economic development. The foreign aid bureaucracy refuses to recognize this. Indeed, AID and foreign aid bureaucrats have argued for years that foreign assistance is vital to the economic well being of less developed countries. Proponents of foreign aid believe that if Americans are asked to just give a little bit more from their hard earned pay checks, America can
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