Foreign aid:

Current Failures

1.
Corruption
Before and After Transfer

Corruption
Negative correlation between corruption and
growth
Aid goes to governments indiscriminately
As a result, developmental aid is often used for
other purposes.

2.
National Policy
Of the recipient country

National Policy
Democracy is NOT the best option.
Enforcement of conditionalities depend on the
recipient country.
Despite this only a few donors, such as Australia
and the Nordic countries, favor good policy
environments.

3.
Distortions
Economically and Politically

Distortions
Political
Rentier state hinders
development
In Sub-Saharan Africa,
the flow of easy money
distorts the priority for
reform

Economical
Most donors and
institutions endorse the
big push paradigm
Micro-macro paradox

Determinants for Success

Corruption

National Policy

Economy

With corruption,
resources and
money going into
developing
countries are lost
through transfer.

A supportive policy
environment, is vital
for every step of
foreign aid from the
beginning of an
initiative to its
implementation.

IDA graduates
achieved economic
development
through effective
regulation attracting
foreign investments.

Successful Aid Needs

Responsible
Donors

Accountable
Recipients

Institutional
Cooperation

Reform?
The evaluation process for placing aid
needs to be more strict.

A Cartel of Good Intentions...

For foreign aid, the
cartel looks better,
but its impact across
the world may be just
as devastating.

Works Cited

Abuzeid, F. (2009). Foreign Aid and the" Big Push" Theory: Lessons from Sub-Saharan
Africa. Stanford Journal of international relations, 11(1), 16-23.
Calderisi, R. (2006). The trouble with Africa: why foreign aid isn't working. Macmillan.
Easterly, W. (2002). The cartel of good intentions. Foreign Policy, (131), 40.
Kanbur, R. (2006). The economics of international aid. Handbook of the Economics of Giving,
Altruism and Reciprocity, 2, 1559-1588.
Moyo, D. (2009). Dead aid: Why aid is not working and how there is a better way for Africa.
Macmillan.
Tavares, J. (2003). Does foreign aid corrupt?. Economics Letters, 79(1), 99-106.

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