Editing Aid effectiveness (section)

=== Conditionalities ===
{{Main|Conditionality}}

{{See also|Tied aid}}

A major proportion of aid from donor nations is [[Tied aid|tied]], mandating that a receiving nation spend on products and expertise originating only from the donor country. <ref name="tiedaid2">{{cite web |title=Tied aid strangling nations, says UN |url=http://ipsnews.net/interna.asp?idnews=24509 |url-status=dead |archive-url=https://web.archive.org/web/20101223203509/http://www.ipsnews.net/interna.asp?idnews=24509 |archive-date=23 December 2010 |access-date=27 May 2011 |publisher=ispnews.net}}</ref> [[Eritrea]] discovered that it would be cheaper to build its network of railways with local expertise and resources rather than to spend aid money on foreign consultants and engineers.<ref name="tiedaid2" /> [[United States|US]] law, backed by strong farm interests,<ref>{{cite news |date=27 April 2013 |title=Aid policy: Helping whom exactly? |url=https://www.economist.com/news/united-states/21576697-administration-proposes-overdue-reforms-americas-overseas-food-aid-helping-whom |access-date=5 May 2013 |work=economist}}</ref> requires [[food aid]] be spent on buying food from the US rather than locally, and, as a result, half of what is spent is used on [[transport]].<ref>{{cite web |date=20 September 2008 |title=Let them eat micronutrients |url=http://www.newsweek.com/id/160075 |access-date=27 May 2011 |publisher=newsweek.com}}</ref> As a result, tying aid is estimated to increase the cost of aid by 15–30%.<ref name="Economist">{{cite news |date=6 September 2008 |title=The future of aid |url=http://www.economist.com/world/international/displaystory.cfm?story_id=12060397 |access-date=27 March 2013 |work=economist}}</ref> [[Oxfam America]] and [[American Jewish World Service]] report that reforming US food aid programs could extend food aid to an additional 17.1 million people around the world.<ref>{{cite web |title=Food aid reform |url=http://www.oxfamamerica.org/campaigns/food-justice/food-aid |publisher=Oxfam America}}</ref>

The [[World Bank]] and the [[International Monetary Fund]], as primary holders of developing countries' debt, attach [[structural adjustment]] [[Conditionality|conditionalities]] to loans which generally include the elimination of state subsidies and the [[privatization]] of [[state services]]. For example, the [[World Bank]] presses poor nations to eliminate subsidies for [[fertilizer]] even while many farmers cannot afford them at market prices.<ref name="Malawi">{{cite news |last=Dugger |first=Celia W. |date=2 December 2007 |title=Ending famine simply by ignoring the experts |url=https://www.nytimes.com/2007/12/02/world/africa/02malawi.html |url-status=live |archive-url=https://web.archive.org/web/20110511212026/http://www.nytimes.com/2007/12/02/world/africa/02malawi.html |archive-date=11 May 2011 |access-date=27 May 2011 |newspaper=nytimes.com}}</ref> In the case of [[Malawi]], almost five million of its 13 million people used to need emergency food aid. However, after the government changed policy and subsidies for fertilizer and seed were introduced, farmers produced record-breaking corn harvests in 2006 and 2007 as production leaped to 3.4 million in 2007 from 1.2 million in 2005, making Malawi a major food exporter.<ref name="Malawi" /> In the former [[Soviet Union|Soviet]] states, the reconfiguration of public financing in their [[Transition economy|transition to a market economy]] called for reduced spending on health and education, sharply increasing poverty.<ref name="Soviet">{{cite news |date=12 October 2000 |title=Study Finds Poverty Deepening in Former Communist Countries |url=https://query.nytimes.com/gst/fullpage.html?res=9C07E0D8163FF931A25753C1A9669C8B63 |access-date=28 May 2011 |newspaper=nytimes.com}}</ref><ref>''Transition: The First Ten Years – Analysis and Lessons for Eastern Europe and the Former Soviet Union'', The World Bank, Washington, DC, 2002, p. 4.</ref><ref>{{cite news |date=11 October 2000 |title=Child poverty soars in eastern Europe |url=http://news.bbc.co.uk/1/hi/business/966616.stm |url-status=live |archive-url=https://web.archive.org/web/20110512034826/http://news.bbc.co.uk/1/hi/business/966616.stm |archive-date=12 May 2011 |access-date=27 May 2011 |work=BBC News}}</ref>

In their April 2002 publication, Oxfam Report reveals that aid tied to trade liberalization by the donor countries such as the European Union with the aim of achieving economic objective is becoming detrimental to developing countries.<ref>{{Cite web |date=April 2002 |title=Oxfam - Trade - Europe's Double Standards |url=http://www.oxfam.org.uk/what_we_do/issues/trade/bp22_eutrade.htm |url-status=dead |archive-url=https://web.archive.org/web/20031003013638/http://www.oxfam.org.uk/what_we_do/issues/trade/bp22_eutrade.htm |archive-date=3 October 2003 |access-date=28 May 2018}}</ref> For example, the EU subsidizes its agricultural sectors in the expense of Latin America who must liberalize trade in order to qualify for aid. Latin America, a region with a comparative advantage on agriculture and a great reliance on its agricultural export sector, loses $4 billion annually due to EU farming subsidy policies. Carlos Santiso advocates a "radical approach in which donors cede control to the recipient country".<ref>{{Cite journal |last=Santiso |first=Carlos |date=Fall 2001 |title=Good Governance and Aid Effectiveness: The World Bank and Conditionality |url=https://www.researchgate.net/publication/228959367 |journal=The Georgetown Public Policy Review |volume=7 |issue=1 |pages=1–22}}</ref>