Foreign aid is bad. It’s bureaucratic, top-down, inefficient, promotes corruption and dependence, and does not get to where it’s needed. That has been the common refrain. A recent, novel addition to those complaints is that aid does not return sufficient economic value to the donor. Now, thanks to the US government’s dramatic shift in foreign aid, we have a natural experiment to test the hypothesis: no more counterfactual models, economic pontification, and ivory tower theorising. We’re going to get the data!
Inflation-adjusted global aid transfers have increased steadily from US$35 Billion in 1960 to $190 Billion in 2021. In that time, alongside broader economic and technological advancements, we have seen dramatic global improvements in infant and child mortality, maternal mortality, life expectancy, and extreme poverty rates.
From 1961 to 2024, the general, global approach to foreign aid was shaped by the Kennedy administration’s passage of the Foreign Assistance Act (1961). Kennedy’s approach marked a shift from ad hoc post-WWII aid programs to a structured, long-term commitment to development. Its purpose was “[t]o promote the foreign policy, security, and general welfare of the United States by assisting peoples of the world in their efforts toward economic development and internal and external security, and for other purposes.” The bill reorganised US aid and created the United States Agency for International Development (USAID). Since then, global approaches to foreign aid have evolved, especially after the Cold War, incorporating humanitarian assistance, economic development, and global health initiatives.
While approaches to foreign aid have evolved since the early 1960s, there have been persistent calls for radically restructuring aid. The general nature of the complaint has changed little. Aid is bureaucratic, top-down, inefficient, promotes corruption, and does not get to where it is needed: Bauer (Dissent on Development, 1976), Hancock (Lords of Poverty, 1989), Maren (The Road to Hell, 1997), Sogge (Give and Take, 2002), Easterly (White Man’s Burden, 2006), Moyo (Dead Aid, 2009), and Deaton (The Great Escape, 2014).
Thanks to the new Trump presidency, we will have an unexpected and dramatic test of the value of aid. He gave us a quasi-experimental (natural experiment) test. One of the many Executive Orders he signed on inauguration day was “Reevaluating and Realigning United States Foreign Aid”. He determined that:
“The United States foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values. They serve to destabilise world peace by promoting ideas in foreign countries that are directly inverse to harmonious and stable relations internal to and among countries.”
We can dismiss any notion of equipoise, the idea that there is some real or dramatic doubt about the direction of effect. The great bottom line (spoiler alert!): people will suffer and die.
As the modern masters of sprawling cruelty, the US Government set about withdrawing hundreds of millions of dollars of aid. By the 28th of March (one month and one-week post-inauguration), the impact of the terminated funding is already affecting direct and indirect services to millions of people in low- and middle-income countries. The effects are so interconnected and global that the only real question is not “Will it be bad?” but “How bad will it be”?
Infectious diseases, big (HIV/AIDS, TB, Malaria) and small (Onchocerciasis, Filariasis,…) will lose prevention, treatment and management funding. Maternal and child health services, including sexual and reproductive services, have been gutted. Multilater, UN agencies have lost funding, as have international NGOs, national NGOs, and small civil society organisations.
But perhaps we should look at the cup half full and celebrate. The grand experiment is finally here. For decades, sceptics have argued that aid is ineffective, stifles self-sufficiency, entrenches corruption, and moves the needle of human progress insufficiently far. Now, at last, we will see an aid-free world through a lens of unvarnished reality. No more speculation, no more hypothetical debates. The world’s poorest countries will become their own control group.
The beauty of the US experiment is its scope. Unlike carefully designed studies of aid effectiveness from behavioural economics labs—where researchers squabble over metrics, counterfactuals, and model assumptions—this will be a real-world, systemic demonstration.
And of course, when the numbers start rolling in—the maternal deaths, the malnutrition rates, the outbreaks of diseases once thought to be on the retreat—there will be no shortage of explanations.
There is nothing surgical about the US Government cuts to aid, nor are they simply recalibration. They have declared ideological war against the world’s most vulnerable, and we will count the consequences in human lives.
If the sceptics were right, we should see a golden age of self-reliance and local ingenuity, unshackled from the oppressive hand of foreign assistance. If they were wrong—well, the numbers will tell their own story.
Will anyone care to listen?