Is Aid Really Dead?

photo credit: Julien Harneis via photopin cc
photo credit: Julien Harneis via photopin cc

It has been four years since Dambisa Moyo published a sensational book, “Dead Aid: Why aid is not working and how there is another way for Africa”. The development community has been discussing what aid can do in the post 2015 agenda. The time is coming next year.

A research project of UNU-WIDER may give policy makers some last-minute pointers. On March 25, Finn Tarp* spoke on the role of aid in the post 2015 context at a public seminar held by Japan International Cooperation Agency Research Institute. In the seminar, he reviews the positive effects of aid in developing countries for the past decades in terms of economic growth, poverty and human development (His interview is available here).

Aid is not dead.

Based on empirical evidence from the UNU-WIDER’s Research and Communication (ReCom) project, he concludes that aid will still play an important role and need to be responsible in some areas in the emerging national and global contexts. He notes that:

  • Aid will have a key role in fragile and resource-poor countries;
  • Aid should devote attention to middle-income countries as much of absolute poverty concentrate there;
  • Aid needs to enhance global/regional public goods like health, climate etc.); and
  • Aid could prepare to assist with the transformations to deal with global environmental issues because development can only be possible if the most vulnerable are protected against the impact of climate change.

I share similar ideas. There are some particular areas that only aid can assist in but not private sectors or other actors. As he mentioned, supporting fragile states could be one example because private sectors would not have incentive to take such risks to start business there. Another might be capacity development in governance. For poverty reduction, I particularly believe that structuring financially sustainable social protection frameworks, projects and institutional capacity building is the area that only aid can contribute to. Reforming or designing redistribution/social policies could be potentially supported by aid further in coming decades.

At least in this regard, aid is still alive.

*Finn Tarp is Director of United Nations University – World Institute for Development Economics Research and Professor of University of Copenhagen.

Comments are closed.