Question

Explain in a few sentences why it is hard to determine if aid given at the country level works or does not

Answer 1

Rich countries have invested over 128 billion dollars on developing infrastructure in poor countries. That is a considerable amount of money. But it is hard to tell whether assistance has really led to growth or poverty reduction or to the Millennium Development Goals. The problem is that in these places, help is a drop in the bucket compared to real resource needs to make a big move. Adding to the difficulty, there are so many non-aid variables influencing such large results, such as international food and energy prices, global deflation, world interest rates, export credits and the like, that attempting to determine the effects of aid is almost impossible.

So what aid money has done in aggregate terms is very difficult to say; instead we want to hear stories about individual aid initiatives. Yet there are thousands of those and there is likely to be a tale of a disaster or a project in which money has been stolen for every success story. That is what lies behind the often contentious academic debate on how help works. Each side chooses its favorite examples and disregards the other.

Any assistance agency is faced with this problem. They may do a project-level assessment to provide insight about whether they are doing things right, but they have a lot of trouble understanding if they are doing the right things to accomplish the goals they set for themselves. In the absence of this, aid agencies can not develop and change and the majority of aid deficiencies and achievements were attributed to recipient countries for a long time, as if the output of aid agencies was a minor factor.

Help impacts economic output in a number of ways, directly and indirectly. It is unfair to view all assistance as homogeneous-irrespective of whether it is emergency assistance, system aid or project-based aid. In their opinion, it is important to crack open the' black box' of international aid, and to deconstruct the chain of causality that goes from aid to politicians, strategies, and country outcomes in complex and non-obvious ways.