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Does aid work?

Monday, October 19, 2009 by Marianne Elliott

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Does aid even work?

If it did wouldn’t there be less poverty in Africa by now?

If what we have been doing for the past half century doesn’t work then why do we continue to throw our money away?

These are big questions and I don’t even want to try to do justice to the full spectrum of the ‘aid debate’ here. This isn’t a professional aid blog, it’s more about my personal journey as an activist and a writer and a person trying to live the best life I can. But I get asked these questions all the time and sometimes I think that just sending people off to read Duncan Green’s excellent book “From Poverty to Power”, although still a very good idea, is a bit of a cop out.

For one thing, people tended to assume that I was loyal to my employer, Oxfam, and that’s why I recommended Duncan’s book. Actual, the causality runs in the other direction. I chose to work with Oxfam because they were serious about understanding what is causing global poverty and willing to ask hard questions about whether aid and development assistance can actually help people to move from poverty into their own personal and political power.

Besides, I wasn’t alone in my appreciation of Duncan’s work. Here is what Amartya Sen, economist and Nobel Prize winner had to say about it:

In telling us what can be achieved by ordinary people through organized action, this book generates hope even as it enhances understanding of what is involved in the removal of poverty. The world does need hope as well as the know-how, and we have reason to be grateful for what we get from this important study of a rich collection of collaborative social action.

If you don’t follow the aid world closely then you may not be aware that a very big debate has opened up about the effectiveness of aid as a means to reduce poverty and improve the quality of life of the poorest people on the planet.

One of the catalysts for this debate has been the writings of Dambisa Moyo, author of ‘Dead Aid’. Moyo is a Harvard and Oxford-educated economist who was recently named one of the 100 most influential people by TIME magazine. She argues that aid has not helped Africa. Instead, she says, it has made African governments unresponsive to the real needs of their people and indifferent to the private sector. Instead of aid, Moyo argues for a free market model of economic development in Africa, increasing liberalisation of trade and direct foriegn investment. It is not a new argument, neo-liberals have been arguing the same case for several decades, and even her supporters concede that there are some significant flaws in her logic. But coming from a young African woman, the argument seems to have been given new life.

So has aid failed?

And if so, is greater trade liberalisation and direct investment the answer?

Oxfam’s analysis of these questions is that although many forms of aid have failed there are some forms that have proven to be effective. Duncan’s book considered what the key drivers are that lie behind the persistence of poverty. Through a comparative analysis of countries that have developed effectively and those where development has been slow or patchy he identifies that the key driver of persistent poverty is inequality.

Inequality, history has shown, is not going to be redressed through pure free market models unless certain key factors are in place. Redressing inequality requires redistribution of power, opportunities and assets. People need to be able to act from a place of personal power in order to hold their governments to account. People have to have access to education and health. People need fair access to assets like land and water. Unless all these factors are distributed more equitably poverty will persist.

So how can aid help to achieve this redistribution?

Duncan argues that those countries where development has been effective all share several key conditions. They all have active citizens and effective governments. They also, of course, need to have a functioning private sector, but without active citizens and effective governments a private sector-driven model of economic development has not been shown to promote equality and therefore does not reduce poverty.

Aid is an important, though not sufficient, component in supporting citizens to become active and empowered to hold to account their governments and other actors who have control of key resources. Non-governmental aid organisations, like Oxfam and many others, are especially well placed to support the development of an active and well-resourced citizenry. At the same time governmental aid, in the form of Overseas Development Assistance (ODA) is well-placed to help build the effectiveness of governments, and improving the quality of governance. These two approaches then complement private sector investment.

Does aid work? Yes, but not alone and not all kinds of aid work.

Development assistance that is directed towards increasing the capacity of citizens to be active in designing, implementing and monitoring social and policy initiatives can work. Development assistance that is directed at improving the quality and accountability of governments, including the provision of basic services like health and education, can work.

South Korea is the often cited example of a country that invested heavily in the provision of education services and focused on direct foreign investment with quite spectacular results. But it is often overlooked that South Korea was receiving massive quantities of aid at the time. Aid without effective government or active citizens may end up propping up corrupt regimes, but aid with effective government and engaged citizens can have profound impacts of poverty and quality of life.

So, aid can work. But not all aid is effective.

More posts to come this week on how you might choose an effective aid organisation to support.

This was a short post on a very large subject and I am sure someone will want to disagree with me. So – let the rumpus begin.

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3 Responses to "Does aid work?"

  1. Ashbyia says:

    I like the idea of micro loans. They seem to work to lift individuals out of poverty, and have a flow-on effect in the community. I would like to see more of this type of aid, financing small individual and community projects at grass roots level. My main objection to mainstream aid is that it doesn’t reach the people who need it. People give money in good faith, and it disappears into greedy hands along the way. It’s disheartening. I also don’t like those World Vision stands in shopping centres, where they display pictures of cute kids, “looking for a “sponsor”. I don’t like being accosted and asked for donations to aid organisations every time I go shopping. I think donors are sick of being asked to give and give, and never seeing any results. I want to know that money I donate actually does some good somewhere in the world, and doesn’t just go towards buying another aid agency car, or into the bank account of some fat cat politician. I think it’s time to make aid agencies and governments accountable for the money they receive from well-meaning donors. People want to give, to help, but I think we’re just tired of nothing ever changing. Obviously, I feel quite strongly about this matter. Maybe it’s because in Australia we have Aboriginal people living in abject poverty, still, despite all the billions set aside for “projects” to improve their welfare. However, the money gets eaten up by administrators, contractors, and whoever else has a finger in the pie. Meanwhile, the people who need help continue to suffer.

  2. Amalam says:

    Some aid works – and some of the time. it is not true that there are ‘no results’. Because the media, and the attention of aid organisations moves on from one story of suffering or injustice to another, does not mean there are no results – just that we are not engaged by the happy stories in the same way as we are by the stories that make us angry or sad. also disaster and suffering can be captured in ‘events’. the success of aid is more often a slow change over years.
    from the perspective of a decade working in the humanitarian & development industries, and a few years on and off studying aspects of them, I would suggest it depends mostly on whether the aid provided is suited to the particular reality of the target/recipient country/community. and what else is going on that enhances or undermines the impact of any particular aid intervention. which is to say it is informed guesswork most of the time.
    I am reading an interesting book at the moment: ‘The Bottom Billion’ by Paul Collier. For a taster, check out this 12min talk on TEDTalks (and if you don’t already know it, TED is worth a look for the huge range of talks offered free to download on a massive variety of topics…):
    people anywhere dont need to be told the benefits of development, or have it defined for them, only to have adequate tools. information and the means to organise and act. where power differences are huge, it may cost a great deal and take a long time for people to change their lives, but that rarely stops people. in this case action by outsiders can make a difference – action rather than simply money.
    this applies in Australia or New Zealand as much as in Afghanistan or Timor Leste.

  3. susanna says:

    wow. So much information to ponder over. You have good points here.

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