Aid Effectiveness Debates
The great debate: does foreign aid work? What Sachs, Easterly, Moyo, and Banerjee tell us about the evidence.
Big Push vs. Skeptics
The aid effectiveness debate is defined by two opposing camps. Jeffrey Sachs argues that poverty is a trap: the poorest countries lack the resources to invest in the health, education, and infrastructure needed for growth. A 'big push' of aid can break the trap. His Millennium Villages project aimed to demonstrate this, providing comprehensive aid packages to selected African villages.
William Easterly counters that six decades and $5 trillion in aid have failed to produce reliably good outcomes. Aid bureaucracies serve institutional interests, conditions are routinely ignored, money is lost to corruption, and the approach ignores local knowledge and preferences. Dambisa Moyo, a Zambian economist, goes further: aid creates dependency, distorts markets, props up bad governments, and should be replaced by trade, investment, and market access.
