The Future of Aid

As 2010 comes to an end, the effectiveness of the fundamental mechanisms of the current foreign aid system has become a much discussed and ever more pertinent issue. Robert Riddle in his 2007 book Does Aid Really Work? highlights the traditional principle that underpins all foreign aid as:

Those who can should help those who are in extreme need…What could be simpler?

However, as Riddle elaborates, the realities of foreign aid are far from simple. Indeed, the current global financial crises, climate change challenges, natural disasters and political volatility are all contributing factors in an increasingly complex international concern.

These issues have resulted in an extensive diversity in both the attitude and approach to aid.  Some, such as William Easterly and Dambisa Moyo, argue that foreign aid has stunted the growth of countries in Africa and instead created a circle of aid dependency, corruption and further poverty.

Other aid practitioners believe that aid can be successful, but only if delivered correctly.

Wolfgang Fengler, lead economist of the World Bank, in his recent publication Delivering Aid Differently: Lessons from the Field, states that aid has changed massively in the last few years:

We live in a new reality of aid. Gone is the traditional bilateral relationship, the old-fashioned mode of delivering aid, and the perception of the third world as a homogenous block of poor countries in the south.

Traditional European and multi-lateral partners are no longer the main donators of aid to countries in the South, growth has been coming instead from new players such as China and Middle Eastern countries as well as NGOs. A one-size-fits-all traditional mode of operating no longer works. In Africa in particular, aid is no longer predominantly the humanitarian model people are familiar with, but instead addresses needs in capacity building, technical assistance and budget support.

At the GDN 12th Annual Conference, held in Colombia in January, these issues will be addressed during the plenary discussion, Development Aid: The Emerging New Landscape.

Dr. George Mavrotas, Chief Economist at the Global Development Network, will be chairing this discussion led by Professor Helen Milner. Dr. Mavrotas warns that aid is not an issue of numbers, but rather efficiency and organization of delivery:

A central message emanating from recent work is that it is not sufficient to scale up aid efforts by raising and transferring more money. Insufficient targeting of sector-specific aid must take part of the blame for the lack of progress made towards the MDGs so far. Unless aid is better targeted, scaling up aid is unlikely to have the desired effects.

With some of the finest minds and the freshest thinking from researchers in the South and across the globe, it remains to be seen if any conclusions are drawn about the future of aid. But watch this space as the discussion unfolds.

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