Foreign Aid and Remittance: Crash Course Economics #34

What is foreign aid? How much foreign aid does the United States distribute each year. Comparatively, not much. In fact, foreign aid only accounts for a small fraction of most nations' overall spending. But it's hugely important. Foreign aid improves healthcare, can promote economic growth, and assists people who've been through disasters. Remittances are moneys that are sent internationally by immigrants. People move internationally to

***

Thanks to the following Patrons for their generous monthly contributions that help keep Crash Course free for everyone forever:

Mark, Eric Kitchen, Jessica Wode, Jeffrey Thompson, Steve Marshall, Moritz Schmidt, Robert Kunz, Tim Curwick, Jason A Saslow, SR Foxley, Elliot Beter, Jacob Ash, Christian, Jan Schmid, Jirat, Christy Huddleston, Daniel Baulig, Chris Peters, Anna-Ester Volozh, Ian Dundore, Caleb Weeks

--

Want to find Crash Course elsewhere on the internet?

[Gwreeves]

How does one get to the assumption that 26% of the budget goes to foreign aid? How misinformed does one have to be?

[JimCullen]

This episode, more than any other in the series so far, reminded me of a joke my high school economics teacher liked to tell.
"You put 5 economists in a room with a problem, they'll leave the room with 6 solutions."

[flubadubdubthegreat]

"... Corrupt leaders" shows picture of mugabe 😂😂😂😂 brilliant

[jonas]

Foreign aid is often not intended to "help" but to create dependencies. If the western countries would want to help, they would abolish the old (mostly colonial) debts of the developing countries, the protectionism and the subsidies. But they don't. They want to keep the developing countries depended on them.
Developing countries have nearly no power in the so highly praised international organizations like the IMF, the World bank, the World Trade Organization or the UN.

I'm not saying that foreign aid is bad over all. Trying to improve the medical situation is noble and works. Trying to improve the education is noble and works.

Saying that countries have to enforce human rights but then have the dead penalty and lock up people in prison without a proper lawsuit is hypocritical and bigoted. Forcing other countries to adept democracy without democrats is not working, take a look at Germany after 1918.

[aaronsmith]

"Countries with corrupt leaders" shows picture of Robert Mugabe. Nailed that one right in the head

[amierchery]

I think people need to realize this is about the economics of foreign aid, not the politics behind it .!

[willferrous]

26 percent? yall need to play democracy 3

[grazed_right]

great video!!! I wish there was a little more on what's broken in the aid system. what I mean is that charities are disincentivized to acknowledge failure, both to the public and themselves. They are always hunting donations and that can cause problems, like where an aid worker in Africa is measured on how quickly they deliver a donor soccer ball to the intended child and get a photo to send back to the sponsors in the states. A lot of charities focus on how many cents per dollar donated are spent "on the ground", when in reality, a charity spending $0.45/$1 effectively is a lot more useful than a charity spending $0.95/$1 ineffectively.

Charities tend to focus on technological fixes, which are sexy to donors here, but are not all that great when they arrive in the intended country. An example I saw while living in Zambia: a wonderful solar stove was being promoted in villages to save the trees and time for women collecting firewood. It sounded like a great idea! It was a black pot in a large clear bag with a solar reflector. The problem was that the staple food, and by that I mean the food eaten at literally every meal of the week except breakfast, is a thick porridge that requires constant stirring. You can't stir the pot if it's tied up in a solar bag and the solar bag doesn't work if it's open. Complete and total failure, that will never be reported on because that would get the charity less donations. A broken system.

[ZVPieGuy]

Only 0.5% of the budget goes to fund NASA. I think we need to spend more on scientific research.

[katherinedays]

1949 George Marshall Plan for foreign aid programs
Remittances: money sent back to their families, positive effect in receiving country
Nonprofit organizations: provide humanitarian aid
- private foundations

[Ulrna]

Less than 10 % of foreign aid actually reaches its destination. And some times that destination is the company itself, and their effort to "help" the country in question comes secondary to making money and financial growth. Always be wary when international organisations hire PR agencies and former politicians to act as advisors.

[Yewon]

This video could've talked about so much more. For example the fact that most of the 'aid' is in the form of interest bearing loans that trap poor nations in an endless cycle of debt. Or the fact that there's many restrictions on the aid. For example the US gave africa some aid to buy planes I think it was but they had to buy them from a US company so really it was a giveaway to American corporations.

[MellowErik]

Thank you for posting the hard questions! It's difficult to talk about these things without trying to take a hard position on it. These are truly grey areas of economics that don't get enough attention.

[tomrivlin]

Anyone interested in the general point she was making at the end should look up the Effective Altruism movement. It's probably not everyone's cup of tea, but it's certainly very interesting stuff.

[Josearnaldomanuel]

I agree on the Remittances thing, in our country a significant portion of the GDP comes from Remittances, so a large number of people here study so they can work abroad. When a large number of skilled people leave, it takes toll on the infrastructure of the country.

[RatherEmpty]

Yes! Norway got noticed. Second most foreign as % of GDP.

[dhruvwarrior]

Great video. Just one error that I would like to point out. Both the IOK and the whole of north east India were omitted from the map of India. The north-east isn't even disputed. Please do take a look. Also, could the econ lessons get a more international perspective.

[powerist]

Speaking of corruption and Foreign Aid, I did heard it from my dad. Not only that even lack of basic common sense or technical knowledge even hurt them. Like one town received a UN Road to alleviate traffic jams by making alternate route via Highway. The town decided to have an idiotic decision by moving their entire town to that road and got another traffic jams.

[owenferrara]

Couldn't you attribute the GNP growth to the fact that there was no more war. Rather than our foreign aid.

[jfinfo]

1% of the budget going to foreign aid isn't that small at all when you have a 4 trillion dollar budget