Here is a characteristically thorough and well-informed fisking dished out by Jim, at Our Word is Our Weapon, demolishing a recent paper from the so-called International Policy Network which claimed that "foreign aid does more harm than good". And while you are there, read Jim’s excellent rebuttal to the argument that because aid has been delivered to Africa over the last 40 years, and many Africans are still poor, therefore aid doesn’t work. (It is astonishing how common this argument is; I don’t hear anyone saying that, because the US spends about 2 trillion dollars a year on health care and people still get sick, we have clear evidence that medicine does not work.)
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If we spent $2 trillion on health care and overall health receded–and evidence shows this recession largely caused by the expenditure–then it indeed was a waste of money.
If, after all the foreign aid spent in Africa, per capita incomes in African nations fell, as they have over the past 45 years, then something is obviously not working that foreign aid can fix. Without effecient and effective institutions, which include valid private property rights (no welfare state), contract enforcement, rule of law, sound money, etc., foreign aid is likely to cause more destruction–you simply prop up tyrants.
Owen replies: Mark – thanks. I’ve added a new posting in my blog explaining why this argument is false.