Thursday, August 30, 2007

The Real Question About Aid

Dani Rodrik puts it nicely:

I feel that the debate on aid is stuck on an unproductive track, revolving around the question of whether it works or not. Yet at closer look, both the advocates and detractors seem to me to be saying something different. So, Jeff Sachs is hardly a fan of the foreign aid system as it currently exists, and he has tons of ideas about how it should be improved in order to become effective (start by cutting back the amount that is returned to rich countries in the form of technical assistance, streamlining the process, and involving the recipients more in the decisions). And Bill Easterly's book on White Man's Burden is full of examples of aid that actually worked (from fighting river blindness to Marshall Plan to the Polish stabilization).

So the real debate is not about whether aid works or not, but about (a) under what circumstances it actually works; (b) how it can be reformed, in principle, to become more effective; and (c) how likely is it that the requisite reforms can in fact be undertaken. The disagreements among Sachs, Easterly, Subramanian, Birdsall et al. are about these questions, but they are often left implicit in the discussion.

We can begin to make progress if we start focusing on these real issues.

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