NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, April 15, 2016

More people are living longer and living better than at any time in history. In the past 25 years alone, child mortality has declined by more than half. The proportion of people suffering from hunger has been cut almost as much. And countries like China and South Korea—once major recipients of development aid—have emerged as global-economic powers.

But some trends now threaten to slow this progress. In Europe, the refugee crisis and domestic security concerns are creating economic pressures that may lead wealthy governments to reduce their support for the poorest countries. In Africa and Latin America, nations that have relied on exports of natural resources are reeling from the drop in commodity prices, which in turn is reducing their ability to deliver essential services.

Development aid can’t by itself make poor countries grow. That comes primarily from the hard work of citizens, governments and the private economy. But well-focused support enables developing countries to do a few really important things better: provide basic health care, increase access to education, and help subsistence farmers improve crop yields.

Yet the way that the current global-aid system measures poverty could deal a setback to countries and people on the cusp of escaping it. When the system was established after World War II, major donor countries like the U.S. and international financial institutions such as the World Bank viewed poor countries and poor people as synonymous. It made sense to use a nation’s “average income” as the main factor in deciding which ones qualified for aid.