Foreign Policy Briefing No. 86

Time to Stop Fooling Ourselves about Foreign Aid: A Practitioner’s View

By Thomas Dichter
September 12, 2005

Executive Summary

The foreign aid industry has for decades tried one approach after another in an effort to make aid work. A career of field experience in the aid industry, however, confirms the empirical record that aid is unimportant to growth or poverty reduction and suggests that aid is not likely to work in the future. The belief that foreign assistance has been generally ineffective, moreover, appears to be widespread among aid practitioners with long field experience.

The current effort by the United Nations to double worldwide aid flows is part of a pattern to reinvent foreign aid. Since the 1950s, the industry has alternately focused on promoting industrialization, agriculture, poverty reduction, health, institutions, and so on. The UN has sponsored numerous grandiose resolutions that have also failed to spur development.

We have come to the point where new ideas on making aid work are recycled old ideas. In practice, the aid industry has not changed much. The ineffectiveness of aid has little to do with a lack of resources. Its roots lie instead in the complex nature of poverty and the flawed nature of institutions and governments in poor countries. The aid industry’s bureaucratic continuing growth also undermines effectiveness and accountability. Rich nations should reject calls for increasing aid and should probably reduce such funding.

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Thomas Dichter is the author of Despite Good Intentions: Why Development Assistance to the Third World Has Failed (Amherst and Boston: University of Massachusetts Press, 2003). He has worked in international development since 1964 in a variety of institutions including the World Bank, the United Nations Development Programme, the Peace Corps, and numerous nongovernmental organizations.