Go-Go Forum: Global Issues
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Foreign Aid:
"The stress on aid disbursements is understandable given the peculiar nature of the aid mechanism. The beneficiaries are supposed to be the poor of the world, who have little voice in their own governments, much less in the high-income country governments who control the aid agencies. One has little or no feedback from the intended beneficiaries whether aid is in fact raising productive capacity. Moreover, the high-income country governments may have many different objectives for their aid besides poverty reduction, such as rewarding allies, promoting donor country exports or fighting drug trafficking. Multiple objectives often work against each other and weaken each other, so that aid may end up servicing none of its multiple goals especially well." --William Easterly "Can Foreign Aid Buy Growth" Journal of Economic Perspectives, Summer 2003. Page 34
" If the foreign aid assistance is substantial enough, and lasts long enough, the capital stock rises sufficiently to lift households above subsistence. At that point, the poverty trap is broken....Growth becomes self-sustaining through household savings and public investments supported by taxation of households. In this sense, foreign assistance is not a welfare handout, but is actually an investment that breaks the poverty trap once and for all." Jeffrey Sachs, The End of Poverty, 2005. Page 246.
"Foreign Aid has at times been a spectacular success...On the flip side, foreign aid has also been an unmitigated failure" World Bank, Assessing Aid 1998. Page 1.
Clearly, the jury is still out on the effectiveness of foreign aid. Leading economic and political scholars are still arriving at completely opposite conclusions. Above, you will find some of the most important articles surrounding this topic, by reading these articles, you will be able to get a sense for the current theories and ideas about foreign aid. Hopefully, you will also generate some questions about the ideas and methods used by these writers. You will also find commentary on the articles, recent media coverage of this topic, and links for sources which are covering this topic regularly.
*(These articles were collected after consulting with some of the top economic scholars. Additionally, we have included other articles which we found extremely helpful in understanding this topic).