Can foreign aid solve African problems

Why the migration problem cannot be solved with development aid

Development aid is increasingly being used in the service of migration policy. But more help doesn't mean less migration. The opposite seems to be the case.

How should the problem of increasing migration be effectively addressed? The political debate is increasingly relying on development aid. The logic is that in order to tackle the root causes of migration, living conditions in the migrants' countries of origin must be improved, through more development aid. Because when people in developing countries are better off, their incentive to look for a higher income abroad disappears. Belief in such a causality is widespread among the public, and development aid is increasingly being used in the service of migration policy.

Opposite effect

According to OECD data, the intensification of the migration issue has actually led to an increase in development aid in recent years (see graphic). The plus is primarily due to two factors: Firstly, due to the numerous hotspots of conflict, humanitarian aid has increased. Second, the costs incurred in donor countries for asylum seekers have increased, although these costs can be statistically shown as development aid in the first year. If you ignore these two factors, it becomes clear that long-term development aid has hardly increased since 2010 - regardless of all commitments to combating the causes of flight.

Higher asylum costs lead to higher development aid

Other official development aid
Help to asylum seekers in the donor country

But is development aid actually helping to reduce migration? Does the support of low-income countries keep their people from looking for a materially better life abroad? Economists are busy researching these questions, and the results are on the whole rather sobering. There are many indications that development aid leads not to less but to more migration. This is partly because poor people can improve their income thanks to development aid and as a result have the money they need to finance the costs of migration (transport, organizing smugglers, etc.).

However, the relationship is not unconditional. At a certain level of development, rising incomes provide an incentive to stay in the country of origin. Michael Clemens (Center for Global Development) and Hannah Postel (Princeton University) put this critical income threshold at a very high $ 8,000 to $ 10,000 (adjusted for purchasing power). That is well above the level of typical recipient countries. A comparison: In so-called low-income countries, which include most of sub-Saharan Africa, income is less than $ 995 per year according to the World Bank. Clemens and Postel are therefore convinced that more development aid almost invariably leads to more migration.

Two forms of help

Rainer Thiele (Kiel Institute for the World Economy) and Mauro Lanati (Migration Policy Center) do not agree with this conclusion in a recently published study. Your criticism: Most research assumes that all development aid has the same effect. But that is not the case. In a study of 25 donor countries and 129 recipient countries, the two economists differentiate between two forms of development aid: firstly, support that increases people's income in the short term, and secondly, support that improves the quality of public services (e.g. schools, clinics) . The second form of help only leads to an improvement in the income of the individual in the very long term - after about ten years.

This distinction is particularly important to the authors because the UN's Millennium Development Goals focus on the second-named, non-monetary development aid for the future. Examples include improvements in health and education. This reorientation, according to the criticism of Thiele and Lanati, remains unconsidered by researchers who only look at the income dimension of development. The two researchers have now established that an increase in development aid that improves non-monetary dimensions of quality of life is certainly associated with a decrease in migration. This connection applies, for example, to engagements for better schools, cleaner air and more reliable state institutions.

What are the consequences? If one really wants to limit migration with development aid, as many politicians have called for, the aim of the aid should not primarily be a short-term increase in the income of people in recipient countries. Rather, the aim should be to improve public services and social infrastructure. In the jargon of development economists, more “late-impact-aid” than “early-impact-aid” would be necessary. But you shouldn't expect miracles from it. If one believes Thiele and Lanati, even the (politically completely unrealistic) doubling of such targeted development aid would only reduce the emigration rate by a comparatively modest 10 to 15%. So the effect would be small.

Political wishful thinking

The economic evidence for the hope of getting the migration problem under control with more development cooperation remains weak. Thiele also admits that the interdependencies are less clear than many political decision-makers would like. Because development aid is just one of the many influencing factors of migration. This is an uncomfortable truth for politicians who like to justify their appeal for more development aid on the basis of migration policy. There are many good arguments for helping poor people; the argument that this prevents recipients from migrating is not one of them.