In This Review

Assessing Aid: What Works, What Doesn't, and Why
Assessing Aid: What Works, What Doesn't, and Why
By The World Bank
Oxford University Press, 1998, 160 pp

Rich countries have provided more than $700 billion in economic assistance to developing nations over the past 25 years. Sponsored by the World Bank, this study attempts to find out what they got for their money by assessing how development aid fostered economic growth and relieved poverty. The short answer is that economic aid alone has not promoted economic growth at all -- an appalling result, despite the fact that much of it was meant to provide political support to friendly governments, not to increase growth or reduce poverty. From the perspective of economic development, much of this aid was simply wasted. But the longer answer provides more hope: Aid given to countries that pursue effective economic practices can increase growth significantly, as long as policies combine sound economic management with suitable developmental goals. Aid alone cannot assure the right policy environment; the government must desire economic development or improvements in health or education and act accordingly. Vigorous economic growth, in turn, always reduces poverty, even when it enriches some people more than others. Although the authors use quantitative analysis extensively, they skillfully render their case accessible to nonspecialists and present many sensible observations.