Effectiveness of foreign aid

Given the amount that Australia is spending on foreign aid, I hope we are performing better than most on effectiveness. Williamson and  Easterly have updated a study in this field and found little improvement since the previous study. 

The two goals of the paper were to test if: 1) donors’ rhetoric matches reality; and 2) they are making any improvements in doing so. Our answer is no on both accounts.

The most conspicuous failures in both trends and levels are in specialization and selectivity.

The best bilateral agency is UK’s Department for International Development…Japan, New Zealand, and Germany also do well, rounding out the top five best agencies.  The United States ranks below average mainly because of poor performance on selectivity and choosing to allocate aid through ineffective channels.

Another theme that emerged is that the Scandinavian countries’ reputation of altruism based on aid volume does NOT translate to good practices; they have below average scores on specialization and transparency and are mediocre in the overall ranking.

Lastly, the UN agencies on average are worse than the other multilateral agencies and the bilateral agencies, and the differences are statistically significant. Above all, they are worse on overhead and transparency.

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One Response to Effectiveness of foreign aid

  1. daddy dave

    Africa is empirical evidence that international aid doesn’t work.
    Printing glossy brochures with doe-eyed African children on the cover is not enough. It has to actually work.

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