Foreign aid has lost its shine and power

Foreign aid has always been controversial because it marries economic assistance with political purpose. The nature of aid has, thus, been shifting with the polarity in geopolitics and the spread of development to the point where the developing world is now able to help itself reach its 'own' milestones. True, much of the developing world will be trapped in a middle-income zone at the end of a process of accelerated development, but it will be a fair bargain to have accomplished it through self-determination. The clock cannot be set back to the ideologically influenced international assistance of the US and the Soviet Union during the Cold War in the 1970s, the commercial compulsions of market liberalisation driven by the Washington Consensus in the 1990s, or even to the more recent strategic lending by China in the 2010s.

Donald Trump has publicly acknowledged the shrinking relevance of developed-world aid through US isolationism. The developing world, or the 'global south', has overtaken the advanced economies in terms of world economic output and is exporting capital. The need for aid is on a declining trajectory as development issues dwindle to manageable proportions. Principally, however, the developing world has created its own solutions. MIT's poverty lab is an interesting endeavour. So is Bangladesh's microcredit. The developing world has come up with its own medicine and is administering it well enough.

Aid as an instrument of state policy entered a terminal decline when international private capital overtook official flows. There are no democratic or capitalist buttons left to press by offering to build schools halfway across the world. Development yardsticks have been codified multilaterally, and there is little scope left for bilateral nudging. The West has been cashing in on its diminishing pile of overseas aid chips to pay for things like security and sustainability. The 'global south' will step up to take care of the humanitarian needs of its own.