For some years now, an interesting debate is going on about the effectiveness of international development aid. The reason is, of course, the persistence of high levels of poverty in many developing countries despite huge amounts of aid (and poverty is a human rights issue). In fact, the biggest successes in the struggle against poverty have occurred in countries that receive relatively little aid (e.g. China). Some aid sceptics even propose to end development aid altogether (see here as well).
Much of the controversy revolves around semantics. If you ask whether development aid is effective, it depends on what kind of aid you’re talking about, and on what you understand by effectiveness. If by effectiveness you mean that development aid should foster economic growth, you’re probably right to say it’s ineffective. But if you say that aid should solve some very specific problems such as a disease or the consequences of a disaster or a famine, then it can be very effective. Some types of aid are obviously better than others, and it’s quite useless to talk about development aid as some homogeneous and undifferentiated whole, or about effectiveness as a purely macro-economic measure.
Take for example this quote on the case of Haiti following the recent earthquake there:
I still believe that foreign aid does not raise economic growth rates, on average. But aid can alleviate human misery, such as when a visiting doctor gives vaccines or hands out medicine. (In fact per capita income may fall, as a result, if some “weaklings” are kept alive.) I also believe that the U.S. military can make a huge difference in the immediate aftermath of catastrophes. Imagine U.S. troops liberating Buchenwald. Would any commentators say the following? “Don’t give him that blanket, sell it to him!”; “Hey buddy, get a job!”; “Moral hazard: they’ll just go get captured again.” etc. I don’t think so.
That’s one way to look at aid for Haiti, noting that perhaps as many as three million Haitians currently stand at risk. Just for a start, someone has to rebuild the port and it’s going to be a foreign effort, organized by governments. The market-oriented solution is more immigration, but even that requires a lot of governmental organization and best of all would be if Obama threw his considerable international prestige behind a coordinated effort to take in Haitian refugees. Tyler Cowen
More on the situation in Haiti is here. More on development aid is here. The aid controversy can be followed on this blog (even though it’s a bit one-sided and mostly in favor of the skeptics).