Another Look at Foreign Aid

The discussion of the effectiveness of foreign aid has reached a high pitch. This paper assesses the sorry past and present key arguments for a potentially more effective and sustainable method of aid delivery. A key ingredient is to shake off the vestiges of structural adjustment and move towards true recipient country ownership complete with “self-conditionality” with aid recipients formulating their own reform packages. This means donors become much more passive, act like a bank and respond to proposals which concentrate on a few critical areas over a three to five-year period. Policy-based program lending should respond to packages put together by the main domestic stakeholders with the help, if necessary, of independent third parties. There should be no compulsion to lend; indeed, an aid hiatus is an indication that the new system is effective. What is required is for donors to stop using aid as a short-term foreign policy tool and for recipients to accept the notion that aid provides the opportunity to reduce the inevitable adjustment pains caused by real reforms.


Issue Date:
2012-08
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/133408
Total Pages:
25
JEL Codes:
O11; O20; O38; P45
Series Statement:
Economic Growth Center Discussion Paper
1015




 Record created 2017-04-01, last modified 2017-08-26

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