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July 08, 2005
Ian Vasquez on Foreign "Aid"
Don Boudreaux
Ian Vasquez of the Cato Institute sums up nicely the problems with foreign "aid." Here's the core:
Why has aid performed so poorly and why should we not expect better results in the future? By the 1990s, a long-delayed consensus emerged among development experts that putting aid into poor policy environments does not work. Overall, there is no correlation between aid and growth, but in Africa aid has harmed development by supporting governments whose policies have actually impoverished people.
Even when aid is supposed to promote policy change, it fails. Countries promise reform, receive donor largess, then introduce half-hearted reforms or fail to do so altogether. A recent World Bank study looked at the record of aid from 1980 to 2000 and found "aid on balance significantly retards rather than encourages market-oriented policy reform." That finding is consistent with a previous Bank study that "reform is more likely to be preceded by a decline in aid than an increase in aid."
Posted by Don Boudreaux in Myths and Fallacies | Permalink
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