Aid works: introduction

Over dinner the other night, some friends – all intelligent, well-informed, thoughtful and caring people – were expressing scepticism that foreign assistance actually works. They were concerned that aid is often syphoned off by corrupt elites, and ends up in private bank accounts in Switzerland. I suspect their views are fairly typical of how people think about aid. This gave me pause for thought. There is a significant body of evidence that aid works – both from analysis of individual projects, and large-scale analysis of the relationship between levels of aid and subsequent economic growth. It is remarkably consistent in finding not only that aid is effective, but that aid is one of the best economic investments that we can make. And yet there is a widespread view that aid is often wasted. One reason why people may believe that aid does not work is that there are so many people still living in poverty, despite the billions of dollars of aid that have been poured in. I think Jeff Sachs has it exactly right:

"It’s like trying to put out a forest fire with one hose. If the fire continues to spread, it doesn’t mean firefighting doesn’t work. It means we need more firefighters.”

I’m in no doubt that aid could be made much more effective, and progress towards improvements in foreign assistance is painfully slow. But the fact that there is room for improvement should not divert our attention from the evidence that aid is already very effective. I’ll try to bring together here some of the analysis on the effectiveness of aid, which I hope will help to inform the discussion. I would welcome any contributions or feedback on this.

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