Direct Aid creates an international welfare trap. ODA incentivises states to restrict development spending, in order to avoid the cuts in aid donations that would accompany rising productivity, public health and growth indicators.  This is made worse by the fact that one of the primary measures of poverty is income below $1 or $2 a day (depending on the region), so governments have an incentive to channel aid to the elites or to schemes that incentivise or entrenched foreign investment, whilst leaving the very poorest members of their population below this poverty line. The construction of hydroelectric facilities, for example, may reduce the amount that private industrial plants and manufacturers pay for their power. However, an improved power distribution network may also be irrelevant to the needs of ordinary citizens within a state, unable to afford tools, medication or education, let alone electronic equipment.  Tax breaks and lax wage protection laws implemented in order to encourage foreign direct investment in a developing economy may act as a further incentive to stratify spending. Moreover, the suppression of average earnings in such environments tends to concentrate wealth among the owners of large amounts of land and other capital.  Further, a large proportion of direct aid is simply recycled by developing states’ governments as debt servicing. A significant proportion (over 60%) of aid donated to the poorest nations is spent to service interest (not even capital repayments) on debts incurred during the short post-colonial investment booms of the 1960s, 1970s and 1980s [i] , often by dictatorial governments. Payment of aid to NGOs would shift priorities, adding impetus to large scale developments and stimulating further growth via multiple, smaller-scale schemes. Increases in tax revenue resulting from a general increase in economic prosperity throughout a state will enable faster repayment of sovereign debts.  [i] “Debt relief under the heavily indebted poor countries (HIPC) initiative.” International Monetary Fund. 06 September 2011.