Aid Effectiveness: A Debate Between Steve Radelet and William Easterly

The Council on Foreign Relations (CFR) has just kicked off a new online debate, The Effectiveness of Foreign Aid, with CGD senior fellow Steve Radelet and CGD non-resident fellow William Easterly as discussants. (This is not the first time Easterly and Radelet have debated aid effectiveness online.)Radelet begins by arguing that the broader debate on aid has become too polarized between aid enthusiasts and aid critics.

Some claim that aid rarely does any good, with ineffective bureaucracies giving aid to consultants and corrupt dictators rather than to those that could use it well. Others claim that aid does a world of good, and that just rapidly scaling up aid would make all the difference in denting world poverty.Most development practitioners and researchers don't fully buy either argument. While there is some truth in each, the accumulated evidence suggests a much more nuanced picture in which overall aid has done a fair amount of good in many countries despite its failures in others, and that increased aid can do more if we improve how we give it...Going forward we need to move beyond the bashing and the rah-rah and honestly learn from both aid’s successes and its failures. The real challenges are to find hardheaded solutions to make aid more effective, and to get more of it to those that can use it well.

Steve's intentions to find a reasonable middle ground in foreign aid are laudable. Unfortunately, the foreign aid system itself won't play along and be reasonable. The system keeps going back to the same failed ideas that prevent most aid money from actually reaching the world's poor…The final reductio ad absurdum is the Millennium Development Goals (MDGs) campaign, currently occupying center stage in foreign aid, which features collective responsibility of all actors for fifty-four different targets to be reached in every country by the year 2015. The United Nations and the World Bank have already admitted the MDGs exercise will fail in Africa, the most aid-intensive region; previous UN-sponsored International Goals also failed with nobody held accountable…The right response is to demand accountability from aid agencies for whether aid money actually reaches the poor. The right response is to demand independent evaluation of aid agencies. The right response is to shift the paradigm and the money away from top-down plans by "experts" to bottom-up searchers--like Nobel Peace Prize winner and microcredit pioneer Mohammad Yunus--who keep experimenting until they find something that works for the poor on the ground. The right response is to get tough on foreign aid, not to eliminate it, but to see that more of the next $2.3 trillion does reach the poor.