What to Read on Foreign Aid

Courtesy Reuters

Over the course of the twentieth century, the richer, more industrialized nations of the world shifted from seeing the poorer nations as targets of conquest or exploitation to seeing them as problems in need of solutions. After World War II, the question of how to help newly decolonized countries in the so-called Third World came to the fore, and a consensus emerged on the need for a variety of financial and other assistance programs. Debates over the propriety, value, and methods of such foreign aid have continued ever since. In the last decade, the subject reappeared in headlines as celebrities and economists rubbed elbows in Africa, the United Nations promoted its Millennium Development Goals, and critics reiterated their concerns over the effectiveness of a half century of previous aid efforts. Since 9/11, there has been a growing institutional convergence of security and development concerns, even as the aid field has become more crowded, with national and international aid efforts increasingly matched or exceeded by those of foundations and nongovernmental organizations.

Does Foreign Aid Work? By Roger C. Riddell. Oxford University Press, 2007.
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Commitment to Development Index. Center for Global Development, 2009.
Index of Global Philanthropy and Remittances. Hudson Institute, 2009.

Roger Riddel’s text provides the single best introduction to the history and range of contemporary debates associated with foreign aid, including the rise of international NGOs as major actors and the centrality of domestic politics to shaping aid practice. The Commitment to Development Index provides a quick look at how well OECD countries are doing in terms of policies that affect the development prospects of poor countries. Aid is one of seven components of the index and reflects a composite measure of both the quantity and quality of aid. The index also provides a useful reminder that foreign aid is not the only, or even perhaps the most important, element of the debate over development. The Hudson Institute’s index is a one-stop compendium of the best available data on global philanthropy.

The End of Poverty. By Jeffrey Sachs. Penguin Press, 2005.
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White Man’s Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good. By William Easterly. Penguin Press, 2006.
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The Bottom Billion. By Paul Collier. Oxford University Press, 2007.
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Jeffrey Sachs, William Easterly, and Paul Collier represent the reigning trio of competing approaches to foreign aid and development. Sachs, a major architect of and adviser to the UN’s Millennium Development Goals, argues that foreign aid is a critical way for communities and countries to escape the poverty trap. Easterly dismisses the notion of a poverty trap and argues that aid, at least as it is conventionally practiced, has largely failed because, in addition to corruption and bad governance in recipient countries, bureaucratic interests and top-down planning overwhelm markets and fail to encourage effective antipoverty solutions. Collier attempts to split the difference, asserting that geography, conflict, and bad governance are the primary traps contributing to keeping poor countries poor. Aid is not a panacea, he claims, but certain kinds of aid, delivered in certain ways, can help combat poverty.

The Anti-Politics Machine: "Development," Depoliticization, and Bureaucratic Power in Lesotho. By James Ferguson. Cambridge University Press, 1990.
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The Battle Against Hunger: Choice, Circumstance, and the World Bank. By Devi Sridhar. Oxford University Press, 2008.
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Both anthropologists, James Ferguson and Devi Sridhar provide two richly textured ethnographies of development projects and programs. Ferguson shows how, in the 1970s, providers of aid to Lesotho constructed an idea of the country as a peasant subsistence society despite the fact that it had been exporting labor and agricultural goods to South Africa for more than a century. The rationality of the development discourse in such a context, he argues, is driven less by facts on the ground than by the interest of the development apparatus in justifying its own existence. Sridhar provides both a quantitative and qualitative analysis of a World Bank–funded nutrition program in India that, despite a lack of evidence for its effectiveness, has become the blueprint for similar programs elsewhere. She shows how the political objectives of both Indian policymakers and nutrition-policy advocates within the World Bank explain the expansion and replication of a program that fails to address the social conditions responsible for undernutrition in India and other countries.

“The Anarchy of Numbers: Aid, Development, and Cross-Country Empirics.” By David Roodman. Center for Global Development, May 2007.
"Where Does the Money Go? Best and Worst Practices in Foreign Aid." By William Easterly and Tobias Pfutze. Journal of Economic Perspectives 22, no. 2 (Spring 2008): 29–52.
Making Aid Work. By Abhijit Vinayak Banerjee, et al. MIT Press. 2007.
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International Initiative for Impact Evaluation

Debates at the cutting edge of the field increasingly center on the contexts and conditions under which specific aid interventions can be effective. Previously, this question was usually addressed through large, cross-national statistical studies designed to assess aid’s impact on economic growth. David Roodman provides a thoughtful and balanced overview of this literature and determines that the findings -- in either direction -- are ultimately dependent on heroic assumptions and uneven or dubious data. This suggests that the question of whether aid “works” will not be resolved using such methods at that level of generality. The rest of these readings offer examples of good contemporary efforts to tackle the problem. Easterly and Tobias Pfutze explore what current best practices in foreign aid would look like and provide a report card for 48 aid agencies that takes into account such criteria as transparency, specialization, selectivity, and local use of funds. Abhijit Banerjee, a key leader of the “randomistas” -- those who advocate more widespread use of randomized controlled trials of development interventions -- argues that development programs and aid funding should be more “evidence-based” and designed to allow a systematic assessment of their impact. And the International Initiative for Impact Evaluation is assembling a database of what works in antipoverty programs, when, and why.

The Struggle for Accountability. Edited by Jonathan Fox and David Brown. MIT Press, 1998.
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“Beyond Planning: Markets and Networks for Better Aid.” By Owen Barder. Center for Global Development, October 2009.
Modernizing Foreign Assistance Network

All too often the politics of aid reform get short shrift. Jonathan Fox and David Brown’s work continues to be the best overview of the political dynamics behind efforts to reform one crucial aid agency, the World Bank, and delineate the multiple and overlapping constituencies at play. Owen Barder builds on the idea that aid reform is fundamentally a political economy challenge rather than a technical one, and outlines a series of reforms that take politics and institutional constraints and opportunities seriously. Aidinfo is a worthy initiative to increase the transparency of aid and other resources for poverty reduction, and its Web site has a comprehensive set of links to organizations involved in the foreign aid field. And the Modernizing Foreign Assistance Network, finally, is the leading coalition of organizations in the United States working to reform U.S. foreign aid in line with a more strategic approach to development policy in general.

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