Wednesday, June 13, 2007

Aid is good for poverty: it maintains it

"Foreign aid has sometimes been a very good thing. It has been rightly credited with solid contributions, such as in boosting post-war recovery in Western Europe, Taiwan and South Korea; rolling back somenasty tropical diseases; and (arguably) helping usher in majority rule in South Africa. Without foreign aid and the geostrategic interests driving it, such outcomes would probably not have been reached as rapidly or as smoothly."

But on the huge canvas of late-20th century history, it's hard to detect many more cases of sustained success, certainly on the poverty front. Indeed for over the past couple of decades, a major problem has been dogging foreign aid: where its leading institutions hold sway, poverty tends to get worse, not better...."

Aid appears to be no better at improving governance than tackling poverty. Indeed a number of studies indicate that the greater the intensity of aid, the worse the quality of public institutions and democratic politics. Aid revenues can undermine public politics just as oil revenues do. They enable elites to survive and prosper thanks to closed-door relationships with powerful institutions abroad; at the same time they help political classes avoid the headaches of managing political contracts of reciprocity with citizens at home." (Thanks Aiman)

How true. How very very true.

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