foreign aid often harms recipients

Among many other problems, a nice article in the NY Times describes one aspect of the harm that foreign aid can do: making it more difficult for local producers to compete with product given away in the local market.

MALELA, Kenya — CARE, one of the world’s biggest charities, is walking away from some $45 million a year in federal financing, saying American food aid is not only plagued with inefficiencies, but also may hurt some of the very poor people it aims to help.

CARE’s decision is focused on the practice of selling tons of often heavily subsidized American farm products in African countries that in some cases, it says, compete with the crops of struggling local farmers....

Under the system, the United States government buys the goods from American agribusinesses, ships them overseas, mostly on American-flagged carriers, and then donates them to the aid groups as an indirect form of financing. The groups sell the products on the market in poor countries and use the money to finance their antipoverty programs. It amounts to about $180 million a year.

The Acton Institute has made a similar point for years-- most pointedly in this ad.