Intelligence Squared: Aid to Africa Debate

AID TO AFRICA IS DOING MORE HARM THAN GOOD from Intelligence Squared U.S. on Vimeo.

AID TO AFRICA DEBATE NOTES

Intelligence Squared

 The Question fro Debate:

“Is aid to Africa doing more harm than good?”

David Reiff:  To paraphrase his statements: On balance, aid has done more harm than good…The problem, I think, is that the whole discussion of aid avoids the problem of politics. People are not saved from outside-people rescue themselves. They can be helped at the margins. If aid was less ambitious, I would support it, such as emergency relief.  If it does as its meant to do, to offer a bed for a night, but not to hope to transform society, then the value of aid is indisputable. What is not indisputable is the idea that foreign institutions and governments know how to fox other people’s difficulties. The problem with aid is that it sets itself as the be-all and end-all. “The man with the gold makes the rules”…What you have, by definition, is outsiders telling people how to behave satisfactorily, then the aid will be withdrawn.  By depriving people of their agents, aid does more harm than good. Moreover, the emphasis on aid is misdirected. We should be talking more about fair trade than about aid.  What is impossible is the notion of aid as the centerpiece of development.

Gayle Smith:  Aid is a very complex instrument that cannot be categorized together. There have been many successes, especially in health and education.  Wireless access in Africa has had a huge impact on the local markets-this has come in part from aid. Microfinance has changed many lives, and a lot has come from aid. There is no question that politics has affected aid and has often been driven by politics. Aid needs to be elevated so it is on par with other institutions and protected from politics, ring-fenced against use for reasons other than development. At the end of the day, development matters. Development is a moral, economic, and security interest. What is the alternative? The military as our primary means to contributing to development?

William Easterly: There are two tragedies in this debate. The first is the unnecessary suffering in Africa-lives can be saved by a 12 cent dose of malaria medicine which is not being done. The second tragedy that we hear a lot less about is that we have already spent 600$ billion in the last 45 years, and children are still not getting those 12cent medicines. Aid would be great if it worked, but the sad tragedy is that money meant for the most desperate people in the world is not reaching them. Over the 45 years of aid, there has basically been a zero rise in living standards in Africa. Every generation calls for an increase in aid to solve the issues of their generation. Everybody calls for the doubling of aid to Africa, but what good does it do to focus on amounts when most of the money is not being used correctly. Most of it goes to corrupt and autocratic rulers. 2/3 of aid today still goes to corrupt rulers (see: Meles in Ethiopia). A lot of aid went into countries that have collapsed into anarchy, such as Rwanda, Congo, Somalia. Thus, aid worsens corruption, blocks democracy, and is an obstacle to getting rid of corrupt rulers. We must condemn the sorry record of aid as simply unacceptable, as making things worse rather than better.

John McArthur:  If we think about what aid achieves and doesn’t achieve, we must caution against random correlations. When we look at statistical evidence, Africa grows on average 2% slower than other developing countries in the world, even with lower standards of governance and higher levels of corruption. Why do Ghana and Senegal, with higher Transparency International ratings, grow slower than China and India? This is because of disease, infrastructure, and lack of education that is a legacy of history. It is about much more than bad governance. Aid is about tackling the challenges of health, education, and infrastructure effectively.  There has been successes. The eradication of smallpox by the UN. The fight against AIDS has brought retroviral medications to more than a million people which was considered impossible. Primary school enrollment rates are up 20%. Measles has been cut 90% in Africa.  This has all been backed by aid. In Malawi aid has supported the national plan to get seed and fertilizer to farmers and the country has doubled its food production. Aid needs to build on success.

George Ayittey:  The record of aid has been a disaster. If you want to better help the African people, you need to ask them what they want.  Africans are interested in reform, not aid. Economic reform, political reform, and social reform. Corruption costs the continent over 140$billion per year.

 

MIT Poverty Action Lab-Madagascar Education Development Trials

I have been reading into the MIT Poverty Action Lab's work since seeing their test results published in the book Economic Gangsters. In looking specifically at their randomized trials in the educational setting, I was drawn to recent work done in Madagascar, which looked at the effects of both a "top down" and a "bottom up" approach to school interventions. Madagascar is filled with the same issues as most of the developing world in terms of lack of truly progressive educational policy and a stagnant public education system riddled with huge systemic problems. The details are as followed for the "intervention:"

Researchers, in collaboration with The Ministry of Education in Madagascar, ran a randomized experiment in 3,774 primary schools in 30 public school districts. These districts represented all geographic areas in the country, but were focused on schools with the higher rates of grade repetition.

All district administrators in treatment districts received operational tools and training that included forms for supervision visits to schools, and procurement sheets for school supplies and grants (district-level intervention). In some of these schools, the subdistrict head was also trained and provided with tools to supervise school visits, as well as information on the performance and resource level at each school (subdistrict-level intervention).

Lastly, several districts also introduced a school level intervention which involved parental monitoring through school meetings. Field workers distributed a ‘report card’ to schools, which included the previous year’s dropout rate, exam pass rate, and repetition rate. Two community meetings were then held, and the first meeting resulted in an action plan based on the report card. One example of the goals specified in the action plans was to increase the school exam pass rate by 5 percentage points by the end of the academic year. Common tasks specified for teachers included lesson planning and student evaluation every few weeks. The parent’s association was expected to monitor the student evaluation reports which the teachers were supposed to communicate to them. These tools allowed parents to coordinate on taking actions to monitor service quality and exercise social pressure on the teachers.

What is so interesting about the results is that the top-down approach, which is the traditional development approach of dealing with school reform, did practically nothing to actually improve the conditions on the ground. What showed large results were the "bottom up" trials, in which parental monitoring, field workers, and community meetings following specific action plans. Here are the details from the MIT site: 


Impact from Bottom-Up Approach: The interventions at the school level led to significantly improved teacher behavior. Teachers were on average 0.26 standard deviations more likely to create daily and weekly lesson plans and to have discussed them with their director. Test scores were 0.1 standard deviations higher than those in the comparison group two years after the implementation of the program. Additionally, student attendance increased by 4.3 percentage points compared to the comparison group average of 87%, though teacher attendance and communication with parents did not improve.

Josette Sheeran, Ted Talk, Hunger

This is a great talk by Sheeran on the realities of hunger in the developing world.
Every day, 1/7th of humanity, about a billion people, wakes up hungry and does not know
how they are going to get their daily meal. This figure (though im sure disputable) is simply staggering.
Every ten second, a child is lost to hunger. There is enough food on the earth to provide nutrition
to every man, woman, and child. The problem is greed. Hoarding. Distribution. Commodity speculation.  "80% of the people in the world have no food safety net."
Introducing food into schools is an extremely effective way of both combating hunger and increasing school enrollment, especially amongst girls, as well as supporting local farmers if the food is locally mandated.




"To a hungry man, a piece of bread is the face of god."
-Gandhi

"Famines happen in the presence of food people have no ability to buy it."
-Amartya Sen

Easterly and "The White Man's Burden"

William Easterly at Google

Critical Commentary-Italics are my own commentary

“Can The West Save the Rest?”

Easterly opens at google addressing the following massive tragedy: 30,000 children die every day from extreme poverty. They die because they are simply too poor to stay alive. This is preventable death, such as diarrhea, which can be prevented by re-hydration packets costing pennies. The other tragedy, according to Easterly, is that the West has already given $2.5 trillion over the last decades, and these deaths are still happening. This is the problem. This is the scandal. That so much money and effort has been spent on this problem, but there is so little evidence of the effectiveness. (This is a scandal. But a lot of the money needs to be seen for what it really has been; simple economic stimulus for western companies, doled out by national agencies, with little regard for outcome; as this money dwarfs other aid money, as it is coming from national sources, it can be seen as the bulk of the issue; but categorizing all aid, all development money as a failure is a gross oversimplification and simply not true).

Too much attention is focused on what is spent, and this creates incentives for spending more money, not for creating effectiveness and results, for actually reaching the poor. This is the second tragedy, according to Easterly. (certainly a problem, but there HAS been results. In many places that have been stagnant, without the input of aid, their growth rate would be, in fact, negative, as per Collier/Oxford Analysis).

According to Easterly, “Nobody is individually responsible for any individual result.” There is, thus, collective responsibility, which leads to unaccountability on the behalf of the aid and donor agencies. The aid plans, thus, give the appearance of action, using publicity, which substitutes for real action, as the money is not actually reaching the people intended, which is another tragedy. There is a lack of customer feedback (the recipients), there are a lack of incentives and accountability for results, and thus, there are a lack of good outcomes as a result. (this is being overly simplistic, though good points are made on the need for more accountability; however, the realities of the international geopolitical platforms in which the world conducts its business needs to be looked at in all fairness; while fraught with problems, the UN has still given the world a net benefit over the years, for instance).

The private market, according to Easterly, would be a good model for what needs to be done in this aspect. Introducing accountability, feedback, incentives for efficiencies. If customers are dissatisfied, they can take their business elsewhere. (However good a point, he fails to note that this is not the case in the developing world with services/government accountability, especially looking at the test case of resource-renting nations).

The markets should be a metaphor for how aid should work, according to Easterly. Donors should be thinking in this mindset to achieve good outcomes.

The poor are stuck with official aid which is caught in complex, top-down planning, which is non-accountable.

Why has this happened? Why have planners taken over foreign aid? If politicians are not to be held accountable for their promises, they might as well make the biggest promises possible. And there is no quick, easy answer to the end of poverty. (agreed).

The countries with the highest aid have had the lowest growth, and the countries with the lowest aid have had the highest growth, according to Easterly. There is no evidence that aid creates growth, according to Easterly's empirical data. (Easterly's data needs to be looked at with external “traps” factored in, such as conflict affecting growth, bad geography, coups, etc, to be seen in all fairness).

Recent UN Reports show that in many countries the Millennium Development Goals are not being met, that they have been a failure. Easterly again points to the need for accountability in the agenda as the answer to a lot of these questions, as a non-traditional answer to the problems. (The question is how to increase the feedback mechanisms with aid, in terms of the target audiences who have had no experience with accountability in their lives, ie: governments, institutions, etc. To many, even the non-effectiveness of the agencies is still much more effective than their own governmental institutions. And again, without the effect of aid, which has been fraught with failure, the realities in many areas would be much worse).

“There is no room for the sort of home grown effort that would get started on its own and attract financing (in Africa).” Easterly proposes a “searcher” model, in which the aid agencies search for people and organizations doing good things on the ground and supporting them. (This is a great idea! Ideally, this would be a fixed percentage of all agencies budgets).

Easterly's Policy Recommendations:

1. When something doesn't work, discontinue it.
2. Discontinue structural adjustment loans to poor countries
3. Get rid of utopian goals and plans (MDG's, etc)
4. For long-run development, most hope is not from aid, but from homegrown development, social entrepreneurs, and private investors

All good points. However, I will have to personally disagree with #3 and #4. I believe that large plans do have a place in the development of nations; and there has been success in meeting these goals, despite Easterly's critiques. There is simply a lot more to the data than he presents, aka: the “known unknowns” that occur in the least developed countries in the world, normally as a result of poverty, aka, the “traps” as presented by Collier. Only in lifting a country from these traps through massive pushes, which will be a combination of homegrown development, social entrepreneurs, and outside organizations, in addition to other massive country-led initiatives (such as, but not limited to the infrastructure-for-commodities deals arranged with China and India, which, despite serious issues, are a reality that cannot be debated at this point in time). An integrated approach will look at lot like a “massive push” such as the MDG's. And catchy slogans draw attention. And attention is a damn good start. I note that Easterly spends a lot of time slamming Bono and Angelia Jolie for their Sachs relations and globe trotting; while far from being policy experts, the ability to draw attention to an issue, the ability to bring a focus onto an issue from people who otherwise would simply not care, is something that cannot be discounted. Thus, I believe there is a roll for the “concerned actor” and many have done tremendous work in bringing issues to light. While teaching in the Bronx, I showed Hotel Rwanda and Save Darfur as part of a Human Rights curriculum I was teaching, and the impact of Clooney, Cheadle, and others on focusing the attentions of inner-city high school youths was immense. There is a place for this attention, and Easterly would do better by not simply dismissing it as a cheap publicity ploy. In terms of the need for homegrown development, I fully agree with Easterly. However, for this development to flourish, much macroeconomic change needs to occur in many of the poorest nations. In these nations, there is simply not room, due to terrible government policy, for social entrepreneurs to flourish; thus, the macro needs to be shifted through englightened governmental policies (trade, business, mineral extraction) before these “homegrown” initiatives can truly transform. And the macro will simply not change in a vacuum; there needs to be outside influence in many nations where the leaders are simply not looking out for the best interests of their citizens. Thus, both approaches are necessary; aid needs to be much more effective, this is a given; however, this is not a black or white issue; many of Easterly's proposals can only come with external funding (ie: homegrown development attractiing foreign investment and turning into viable social businesses) and a change in the domestic business environment. Capitalism cannot cure all; the platforms for capitalism need to be laid down before it can do so; in the meantime, as Paul Collier notes, much of the roll of aid will be to simply provide a basic decency in the lives of many.

The economic miracles of the East have come in the absence of foreign aid; in fact, China was a donor nations to its many Maoist friends during the worst of its economic debacles of the last decades; however, the reality on the ground is the reality-the Asian tigers have already seized the manufacturing and service based growth that is needed by African nations to grow themselves out of poverty, and there is very little chance of manufacturing becoming agglomerated in many of the countries of the bottom billion in the coming decades, and thus, the problems will persist, unless assistance is given, in the forms of aid, trade barrier resolution, and infrastructure development. A country such as Chad will simply not be able to compete its way out of poverty with a nation such as Vietnam or even Bangladesh. What, then, to do about the Chads of the world? Abandon them? Aid needs to be focused, targeted, and made more accountable for the truly needy of the world, of which there are many. It does not deserve to be abandoned, despite all its failings

Another Tragedy

The headline, "Somalis Waste Away as Insurgents Block Escape From Famine." fills a space far from the top of the NYTimes webpage; in seeing out the news, tucked into a subheading, far beneath the cries of the budget impass, the daily trends of New York, it seemed strangely fitting. Another forgotten corner of a forgotten land, filled with legions of forgotten people, who are now starving by the thousands, while the world whittles away its attentions on the disfunctional western governments and their self-enabled fiascos, or 65 people killed in one of the richest nations in the world by a lone madman; and yet, what of the thousands dying every day, the nameless, the countless, those who, in their multitude, will be hidden from history, admonished to obscurity, a cruel fate. I am brought back to the words of Kapuschiski who wrote of these very lands decades ago, as timeless as the struggles, the utter fragility, ongoing:

"...in the dry season, most pastures disappear entirely, and pools and wells become shallow or dry up altogether. If the drought persists, hunger ensues, animals perish, many people die. The young Somali starts getting to know his world. He studies it. Those individual acacias, those torn-up clumps of sod, those lonely, elephantine baobabs are signals telling him where he is and which way he should go. Those tall rocks, those steep, stony faultlines, those protruding cliff edges, instruct him, indicate directions,  keep him from losing his way...The youngster will then comprehend that the features of the landscape are varied and changeable, and that one must know the order of their permutations, their significance, what they are telling him, what they are warning him...It is here that begins the great Somali game, the game of survival, of life. For these trails lead from well to well, from pasture to pasture...The dry season becomes a time of fever, tension, fury, wars. People's worst traits surface: distrust, deceit, greed, hatred."

Collier, The Bottom Billion, and a Summation on Trade and Aid

On the role of the aid agencies:

“Aid agencies should become increasingly concentrated in the most difficult environments. That means that they will need to accept more risk, and so a higher rate of failure. They should compensate by increasing their project supervision, which means higher administrative overheads. They should become swift-footed, seizing reform opportunities at an early stage. They should intervene strategically, financing big-push strategies for export diversification. They should introduce governance conditionality. At present, the powerful force of popular opinion is driving agencies in precisely the opposite direction. They cannot afford failure. They have to be lean with low administrative expenses. They have to prioritize long-term social objectives rather than short-term opportunities for reform and growth. They have to give unconditional debt relief.”

On the role of trade policy:

“With trade policy, self-interest meets ignorance and duly manipulates it. Rich-country protectionism masquerades in alliance with antiglobalization romantics and third world crooks. The critical changes in trade policy-temporary protection of the bottom billion from Asia in our markets-are politically difficult not because they threaten any interests, but because they do not fit into any of the current slogans and so don't make it onto the agenda.

Collier, the Bottom Billion, and a Novel Approach to Corruption

A Novel Approach to Corruption in the Public Sector-The Bottom Billion-Laws and Charters

On the utilization of the press in combatting corruption in the public sector, obviously reliant on a free local press and an open environment free of politically-based intimidation, obviously not the case in many of the bottom billion societies. But nonetheless, certainly noteworthy.

“...only around 20% of the money that the Ministry of Finance released for primary schools, other than for teacher's salaries, actually reached the schools. In some societies the government would have tried to suppress information like this, but in Uganda, far from suppressing it, Tumusiime-Mutebile used it as a springboard for action. Obviously, one way would have been to tighten the top-down system of audit and scrutiny, but they have already been trying that and it evidently wasn't working too well. So Tumusiime-Mutebile decided to try a completely different approach: scrutiny from the bottom up. Each time the Ministry of Finance released money it informed the local media, and it also sent a poster to each school setting out what it should be getting...Now, instead of only 20% getting through to the schools, 90% was getting through....the media had been decisive-in this case reports in the newspaper. So scrutiny turned 20 percent into 90 percent-more effective than doubling aid and doubling it again.”

(150).

Collier, The Bottom Billion, and Independent Service Authorities

Independent Service Authorities

Collier suggests a solution to the problem of bad governance; the creation of so called “Independent Service Authorities.” “The idea is that in countries where basic public services such as primary education and health clinics are utterly failing, the government, civil society, and donors combined could try to build an alternative system for spending public money...The authority would be a wholesale organization for purchasing basic services, buy some from local governments, some from NGO's such as churches, and some from private firms. It would finance not just the building of schools but also their day-to-day operation., Once such an organization was put into place, managed jointly by governments, donors, and civil society, both donors and the government would channel money through it.” This is an extremely debatable idea, though from first inspection, a novel and wise one; I have visited the government health and education ministry buildings in some of the bottom billion societies, and the sights were terrifying, to say the least, not even to speak of efficiencies. In some of the worst nations in the world in terms of governance, this would be the only viable option-the civil services are so thoroughly disintegrated, that starting over is the only way of actually progressing, however, heartbreaking a thought this might be (simply sidestepping 50 years of post-independence “progress”).

And creating buy-in by the actual nations would be extremely difficult; the interests are intrenched, and bypassing these interests would require large political capital and guts by the top leadership. Collier compares his idea with that of one already implemented in many nations, that of the “Independent Revenue Authorities” which have been created in the last decades. “The function was taken out of the traditional civil service for precisely the reason that I want basic public services to be taken out of the traditional civil service-there was no realistic prospect of the traditional system being made to work. Why did governments go for the radical option on revenue but not on service delivery? The answer is depressingly obvious: governments benefit from revenue, whereas ordinary people benefit from basic services. Governments were not prepared to let the traditional civil service continue to sabotage tax revenues, because governments themselves were the victims. They were prepared to leave basic service delivery unreformed because the governing elite ot its services elsewhere.”

Collier, The Bottom Billion, and "What is Aid's Best Roll?"

And Thus, What is Aid's Best Role?

In terms of the different areas of poverty traps, (including the Conflict Trap, the Natural Resources Trap, Landlocked Trap, and the Bad Governance Trap), Collier notes that the one that is most promising for change, in relation to the input of foreign aid, is the last, governance (and policies). In terms of the relation between the actual donor agencies and the governments on the receiving end, Collier notes, “...aid agencies have very little incentive to enforce conditions: people get promoted by disbursing money, not by withholding it.” While this has been since adapted and changed to reflect more of the realities on the ground, the problem still persists. Changes in governance must not be simply promised in return for offers of aid; the changes must take place, must take root, and must be well-configured before the aid is distributed. This is the only practical way of dealing with this issue of distribution and conditionality. Collier further notes, “The key objective of governance conditionality is not to shift power from governments to donors, but from governments to their own citizens...why should we give aid to governments that are not willing to let their citizens see how they spend it?” Thus, aid levels should be directly tied to good governance, transparency, and positive changes on the ground for the citizens of these nations. However, a big hurdle in these reforms of governance comes with the lower and middle levels of the government itself, the civil service, which in many nations of the bottom billion, has been hollowed out and stocked with incompetence and corruption as a guiding principal. How, thus, to change the entire culture of a civil service, from the “serve thy self” motivation to actual performance-based efficiency, with little extrinsic motivation present to reward positive change? Can aid bridge this gap? If not, what can? I believe this is one of the biggest hurdles facing the developing world. An entire culture can only be changed from the top-down; getting the right talent in place at the top is extremely difficult in itself in an age of kleptocrats and octogenarian rulers; but even once this change has been made, extending their writ down to the lowest levels takes a huge paradigm shift in the entire culture of the nation, and as a microcosm of the nation, the civil service. In fact, Collier has looked into the effect of bringing in technical assistance, ie: foreign experts, and their effect on a country's turnaround; his research has shown that foreign experts are only going to help with situations in which there is a new leader, which is very specific in the nations of the bottom billion. “Technical assistance during the first four years of an incipient reform, and especially during the first two years, has a big favorable effect on the chances that the momentum of the reforms will be maintained. It also substantially reduces the chance that the reforms will collapse altogether.” These are all the smaller pieces of a vast pie: each needs to be considered and enacted in its own right to sustain a longer-lasting growth and development in these nations. The biggest problem with the current deployment of technical assistance to nations is that, “...technical assistance is supply-driven rather than demand-driven. The same assistance is poured into the same places year after year without much regard to political opportunities.” And thus, the agencies MUST understand that their work is fluid; that the human situations and the human capital that they are dealing with are fluid, changing, and prone to opportunity and downturn. They MUST be responsive to these changes to take advantage of the particular opportunities that present themselves, to make the most of a finite resource. 
Collier later critiques the motivations and the change-capacity of the agencies in "Aid to the Rescue?": Agencies operate with two-types of fair-shares rules. One is for countries: it is difficult to privilege one country over another, even temporarily, although if the Krugman-Venables thesis of agglomeration economies is right, then one of its implications is that such temporary concentrations of aid are likely to be efficient...So the present aid system is designed for incrementalism-a bit more budget here, a bit more budget there-and not for structural change. Yet we know that incrementalism is doomed because of diminishing returns to aid. Just doing more of the same is likely to yield a pretty modest payoff. For aid to promote structural change in countries requires structural change in aid agencies." 

Collier continues with the next aspect of aid coming under his statistical eye, that of money supplied for project or budget support. He notes, “Money early in reform is actually counterproductive. It makes it less likely that the reform will maintain momentum.” Thus, in the early stages of a post-conflict turnaround, the most effect assistance that can be given is in the form of technical assistance. A few years down the line, however, the tides turn, and budgetary and project support becomes much more viable. In summing this “sequence,” Collier notes, “Aid is not very effective in inducing a turnaround in a failing state; you have to wait for political opportunity. When it arises, pour in the technical assistance as quickly as possible to help implement reform. Then, after a few years, start pouring in money for the government to spend. Aid used in this way to support incipient turnarounds would be pretty high-risk. Even with aid many incipient turnarounds would fail. The payoff is high because the successes, when they happen, are enormously valuable.” And thus, a “turnaround fund” would be seen as the most likely source of funding for these transitions to occur, which the British government has already funded in the last number of years. (It would be interesting to contrast this statistical analysis with analysis of the opposite, or such a situation as what is currently going on in Malawi, where a negative shift in governance has caused a large pull out/suspension in donor funding and budgetary support.)

Collier, The Bottom Billion, and "Aid to the Rescue?"

“Aid to the Rescue?”

“Aid does tend to speed up the growth process. A reasonable estimate is that over the last thirty years it has added around one percentage point to the annual growth rate of the bottom billion. This does not sound like a whole lot, but then the growth rate of the bottom billion over this period has been much less than 1 percent per year-in fact, it has been zero. So adding 1 percent has made the difference between stagnation and severe cumulative decline. Without aid, cumulatively the countries of the bottom billion would have become much poorer than they are today. Aid has been a holding operation preventing things from falling apart.

Strong words in a nominal, yet forceful, defense of aid. From the viewpoint of the Easterly's of the world, quite radical, I believe; the knowledge that while far from perfect, the situation without the cumulative input of aid dollars would be much worse; which is both encouraging for aid, and discouraging the overall situations of the poorest countries in the world. However, Collier then introduces the concept of “diminishing returns” in regard to increasing the amount of aid to further increase the effectiveness of this growth boost in the developing world. According to Collier, “A recent study by the Center For Global Development, a Washington think tank, came up with an estimate of diminishing returns implying that when aid reaches 16percent of GDP it more or less ceases to be effective.” Thus, this needs to be seen as a strong guideline in the deployment of resources; the ability of a government to intake vast sums of foreign aid is limited in many ways; the absorption of these funds is often near impossible by many small aid garnering nations. In looking at the effectiveness of aid vs. budget support (aka: providing countries with money to use at their discretion in distribution), Collier notes that aid has been much more effective and value-adding, due to the aid agencies themselves. While far from perfect in their bureaucracies and regulations, the agencies do enhance the effectiveness of the financial transfer (102). “Given the bad public image of aid agencies...this is hard to believe, but there it is. The projects, procedures, conditions, and suchlike have been beneficial overall, enhancing the value of the money transferred compared with just sending a check and hoping for the best...Aid has tended to be more effective where governance and policies are already reasonable...(this) is actually pretty controversial...people quite reasonably do not like the harsh-sounding implication that the countries with the worst problems should get the least money” (102). Collier continues, “...the biggest deviation was that far too much aid was going to middle-income countries rather than to the bottom billion. The middle-income countries get aid because they are of much more commercials and political interest than the tiny markets and powerlessness of the bottom billion.”

And thus, the revolutionary statement emerges: Aid should be reserved for the most needy. It should not be used as a carrot in a geopolitical stage set. And yet, of course, when the history of aid is studied, this is exactly what the vast bulk of aid has been earmarked for over the years. Think of the unwitting countries caught in the crossfire during the Cold War. Countries taken over by ideological battles, aid recipients chosen because of simple political proclamations, not based on the theory that the most needy should get first. Is it even a possibility that aid could exist in a non-politicized manner, where the welfare of the poor is the sole determining factor in disbursement?