IEA Managing Editor Daniel Freeman has written for CapX discussing new IEA research by Mark Tovey revealing that UK foreign aid money is being spent in regions richer than some parts of the UK.

Daniel wrote:

“A report published this week by the Institute of Economic Affairs highlights British aid spending in regions which are richer than at least one local authority in the UK. These projects, all from within the last five years, include £244,061 on a project to alleviate traffic congestion in Kuala Lumpur (GDP per capita £21,199, in line with Sefton), £332,783 on climate change adaptation in Mexico City (GDP per capita £19,292), and £258,630 on improving earthquake readiness in Ordos, a prefecture in northern China with a GDP per capita of £27,500 which puts it in line with Swansea and richer than 69 regions in the UK. 

“Another example which has attracted press attention is the £200,165 spent on a project to encourage traditional all-female Yue opera in Shanghai. Assuming this isn’t some sort of MI6 front operation to infiltrate the strategically vital opera scene, it is reasonable for taxpayers to question why they should be footing the bill for cultural enrichment in one of the richest cities in the world’s second largest economy. 

“For example, the money spent on encouraging female opera in Shanghai would have been sufficient to buy around 100,000 doses of the R21 malaria vaccine, which prevents 75% of severe malaria cases and reduces overall healthcare costs in affected regions. What economists call the Penn Effect (goods and services are generally cheaper in poorer countries) means that aid spending is likely to go further if restricted to regions that are poorer than the global average. 

“But beyond this, the fact that these projects were approved highlights a structural problem in the way the foreign aid budget is set in the UK. The Government has a statutory commitment to spend 0.5% of UK GNI on aid. As GNI growth can be difficult to predict, this can sometimes lead to projects of dubious merit being approved in order to hit the target if growth is higher than predicted.”

Read Daniel’s full piece here.

You can also read a full copy of Robin Hood in Reverse: Foreign aid spending in regions that are richer than parts of the UK.