Issue 659 Direct Aid August 19, 2015

Direct aid is when either money or food/medicine is given directly to disaster/violent conflict victims, and the poor.  So what are the benefits and when should it be applied?

Direct Aid:  For one according to Foreign Affairs journal which discussed the topic, there have been no drunks, or addicts using the aid to feed their self-abuse.  In fact, any money directly given has been used to start businesses or procure what the individual needs to survive.  As such, the primary form of direct aid, being cash is best used in impoverished countries where a majority of people are self-employed like in Africa.  This direct money replaces or substitutes for the lack of capital, credit, insurance or products necessary to grow their businesses.  This means however, that countries like the United States where such services exist cannot have this form of aid for their poorer populations save for specific communities.  These communities being where the situation mimics the self-employed circumstances like in the African Continent.

The other time you want to give direct money aid to individuals is right after a conflict or a disaster. Both these situations limit localized knowledge so adequate aid cannot be given in the form of traditional aid like food stuffs.  So the direct aid via money is better due to the sheer flexibility of it so that the people affected can buy and get only what they need.  Thus this aid is cheaper as countries giving support need not spend massive amounts on food, clothing and the like per person when victims can simply buy it themselves based on need.

The final form of direct aid does not come in monetary form like the others.  This aid comes in the form of vaccines which are either subsidized or given free if they are too expensive for a population to afford.  Likewise it works the same with food when food prices rise exponentially pricing out the poor and risking a famine.  As per the examples, the conditions must exceed regular needs for this to work for this public good category of aid.

Conclusion:  Direct aid is being looked upon as the future of aid to people in trouble.  No more corrupt officials taking the money for themselves, the people who need it actually see the money and have the flexibility to use it when and where they need it.  Other forms of aid like direct aid in the public goods category make up for the rest.  What’s good about direct aid also is that it minimizes costs while maximizing the effectiveness of the aid itself.  As such, it is cheaper and easier to distribute to those in need.  It is my belief, based on the articles in Foreign Affairs Journal and others like in the Economist, that direct aid is the best way to go with respect to the future of aids programs.