The History of Foreign Aid

“The very poorest in the world are the ones who are most in need of help. Who is going to help the poorest of the poor if organisations like DFID do not?” (Aung San Suu Kyi, 2012)


Faced with the arduous task of evaluating the highly political history of development, admittedly, the temptation arises to ignore the past and concentrate only on future ‘progress’. However, to consider the past trivial would be a dangerous mistake. If we are ill informed about the past, how do we empathise and react to today’s development dilemmas? Foreign aid is arguably not the most significant factor in development, however, in order to understand some of today’s heated debates, it is important to gain some insight in to it’s history. Has the approach to aid changed? Colonialism speaks to contemporary issues in development and I will make a simple comparison of The Colonial Development Act (1929) with DfID’s 2006 White Paper on International Development(1).

President Truman’s Inaugural address(2) on 20th January is considered, by some, to mark the beginning of foreign aid.  However, it was admitted that the term ‘development’ was added to the presidents’ speech as a ‘public-relations gimmick’ (Halle, 1964 :11) . This makes it sound as though the introduction of foreign aid was a mistake. (Easterly, 2010). Because ‘development’ created excitement in 1949, would it be accurate to assume that this is the first time in history that we discover a countries’ government giving foreign aid? This question prompts me to look back at colonial history and the British Empire.

Until the late 19th century, colonial history shows us that the British colonies were expected to look after themselves financially. The colonies could not anticipate economic assistance from the Imperial government. That arrangement would only be adjusted if there were to be a national emergency (Barder, 2005). In 1895 Joseph Chamberlain’s policy stated that for the first time the British government would now claim responsibility for the financial development of its colonies. However, this assistance was given on ‘an ad hoc basis’. Humanitarians were displeased and yearned to see a shift in the approach to social development of the indigenous and colonial people (Abbott, 1971). In 1929 the Colonial Development Act was introduced. Does the language used show that there was genuine compassion for people in other countries? No, it seems as though the only intention was to reduce the level of unemployment and to stimulate British exports (Abbott, 1971). It seems to be focussed on self-gain for Britain.

There have been some changes in policy since 1929 (3). Looking at the 2006 white paper, we see facets that were not considered development in 1929. In the paper, ‘security’ and ‘reducing violent conflict’ is discussed. Chambers and Alfini composed this characteristic sentence of the 2006 White Paper, using the top 20 words used,

“Poverty reduction requires international development efforts to help strengthen governments in developing countries (supporting poor peoples access to public services), increase international aid (Doubling G8 countries’ aid to Africa), tackle climate change, and reform international development systems such as the World Bank to better fit the needs of today’s world (Alfini and Chambers, 2007).”

‘Reducing violent conflict’, ‘security’, ‘supporting people’s access to public services’, ‘climate change’ and ‘reforming multinational development institutions’ all show major changes in aid discourse. Despite this, cynical evaluations of how aid money is spent remain. Fears such as dependency and corruption endure (Moyo, 2008), and have been the subject of many recent newspaper articles(5). Is aid still about self-gain? ‘Strengthening governments in developing countries’ could  invoke a feeling of superiority .

Foreign aid is still a complicated issue. Some argue that ‘Aid is not benign – it’s malignant’ (Moyo, 2008). Today’s aid is not as effective as one would hope. Conversely, when you look back at policy documents, we see some improvements in the language, length and detail, “reflecting the growth in knowledge” of development (Alfini and Chambers, 2008). It is vitalising that the British government sought to scrutinise aid, refine their policies and research how best to improve the wellbeing of those who suffer in other nations (4). There is evidence that aid is making a positive, sustainable difference to reducing poverty and improving livelihoods (Lovet, 2012). As Aung San Suu Kyi said, organisations like DFID must assist poor people. But the issue that is most important for ‘the bottom billion’(Collier, 2007), is the way that aid is offered, rather than how much. Shouldn’t the focus be on the poor rather than ‘the British people’?

Author of Dead Aid (1999) Dambisa Moyo


(1) After 1963 White papers were only published in the periods when Labour governments were in power (Alfini and Chambers 2008).

(2)  In 1949 President Truman said the following, , “….For the first time in history, humanity  possesses the knowledge and the skill to relieve the suffering of these people…we should foster capital investment in areas needing development…” (Easterly, 2010)

(3) There has been a “U-shaped curve of Northern and donor intervention (high in the colonial period, low in the 1970s, and then rising to levels in the 1990s and 2000s that would have been unthinkable two decades earlier) (Alfini and Chambers , 2008).

(4) Major changes happened under Labour in 1997. DfID was created as a separate department from the foreign office. Global poverty reduction was now declared the main priority of foreign aid and DfID introduced the concept of development policy coherence. We read this in the 1997 Labour Party manifesto,

“Labour believes that we have a clear moral responsibility to help combat global poverty. In government we will strengthen and restructure the British aid programme and bring development issues back into the mainstream of government decision-making. A Cabinet minister will lead a new department of international development.” (Labour Party Manifesto, 1997)

DfID introduced the concept of development policy coherence and they now use ICAI, which is the independent body responsible for scrutiny of UK aid. ICAI focuses on “maximising the impact and effectiveness of the UK aid budget for intended beneficiaries and the delivery of value for money for the UK taxpayer”.

(5) Recent newspaper articles criticising British Aid

Provost.C and Hughes. N.,2012. Why is so much UK aid money still going to companies based in Britain?The Guardian (Online) Available at: <; [Accessed 6th October 2012]

Gilligan. A.,2012. ‘Poverty barons’ who make a fortune from taxpayer-funded aid budget. The Telegraph(Online) Available at: [Accessed 6th October 2012]

Young. N.,2012. Justine Greening demands review of DFID’s use of contractors. Civil Society (Online) Available at: <; [Accessed 6th October 2012]

Hope. C., 2012. Lord Ashcroft tells Coalition ‘to turn off the golden taps and stop flooding the developing world with our money’.” The Telegraph (Online) Available at: <; [Accessed 6th October 2012]

Birrell. I.,2012. Snouts in the aid trough!The Daily Mail. (Online) Available at: <; [Accessed 6th October 2012]


Abbott. G.,1971. A Re-examination of the 1929 Colonial Development Act. The Economic History Review. 24(1) pp.68-81

Alfini, N and Chambers, R., 2007. Words count: taking a count of the changing language of British aid, Development in Practice, 17: 4, pp 492 — 504

Aung San Suu Kyi., 2012. Aung San Suu Kyi backs British aid. DFID. Available from: <> [date accessed: 11th October 2012]

Barder. O., 2005. Reforming Development Assistance: Lessons from the UK Experience. Center For Global Development. Available from: <> [Accessed: 6th October 2012]

Collier, P., 2007. The Bottom Billion. Oxford: Oxford University Press.

Halle.Louis J.,1964. On teaching International relations, The Virginia Quarterly Review, 40(1).pp 11

Department for International Development. 2011.The Future of UK Aid. Available at: << [Accessed 6th December 2012]

Easterly. W., 2010. How Foreign Aid was invented by accident. The Aid Watch Blog [Blog]. New York Universities Development Research Institute. Available at: [Accessed 6.10.12]

Halle, J.,1964. cited in Rist, G., 2007. Development, Development in Practice, 17(4-5) pp 485-491.2

Labour Party Manifesto,1997. Available at: [Accessed: 6th October 2012]

Lovet. A., 2012. Ten things you need to know about European Aid. ONE international. Available at: <’t-find-in-the-sunday-telegraph/?akid=3408.5926598.lzLw5K&rd=1&t=2&gt; [Accessed: 6th October 2012]

Moyo, D., 2008. A Brief History of Aid in Dead Aid: Why Aid is Not Working and How there is Another Way for Africa, London: Penguin, pp10-28.



One thought on “The History of Foreign Aid

  1. This is really fantastic – full of interesting detail, the hyperlinks are great and you’ve clearly done your reading for this and found other interesting sources to refer to. Well done! It’s interesting to reflect on the distinction between ‘aid’ and ‘development’ – and we’ll talk more about this in the week on aid – and how this might change the way we view the past as well as the present and the future. Something you could do some work on is your referencing. Read my easy guide and look at what you’ve done here and how you might improve it. Well done & I look forward to reading more!

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