What should development aid do? by Nancy Qian

For decades, development assistance has gone either to governments that lack the capacity to administer it, or to non-state actors who are essentially in competition with the state. It is time for a new approach centered on a less ambitious but much more practical goal.

CHICAGO – Development assistance is one of the most important policy tools rich countries have to transfer resources to help the poor. Between 1960 and 2013, OECD countries gave $ 3.5 trillion (in 2009 dollars) of official development assistance (ODA). About $ 568 billion (in 2003 dollars) went to African countries.

But the effectiveness of ODA is a source of much controversy. Former World Bank Economist William Easterly and Nobel Laureate Economist Angus Deaton separately Argue that help has lack to lead to continued improvements in poor countries, and may even have made conditions worse. Going further, economist Dambisa Moyo argues that aid has only increased dependence on developing countries on foreign aid.

These critics and others fear that the availability of foreign aid reduce incentives for recipient governments to improve their country’s institutions. Because aid money can be – and often is – Fly by those in power, it can fuel corruption or be used by armed groups to support violent conflicts. And to the extent that the help intensifies competition for limited human capital resources such as doctors, nurses and teachers, this can hamper the development of state capacity.

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About Norma Wade

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