What works
There may be no more important debate today than the one about the effectiveness of development aid. As he said during the World Economic Forum's Annual Meeting, US Treasury secretary Paul O'Neill believes more proof of effectiveness is needed before more money is made available. As I and many others have pointed out, this looks like dissembling to avoid confronting the US's woeful record on aid (the lowest as a share of national income in the industrialised world) and the administration's general suspicion of development.
Today's Financial Times has an excellent summary of the debate It accurately reports the consensus of most economists: "Aid can help, but it should be concentrated on countries with good macroeconomic policy and governments genuinely committed to improving public services and infrastructure, and stamping out corruption." This thinking is slowly infusing its way into the actions of donor countries and, to a limited extent, the World Bank and the IMF.
But, as the article points out, focusing on what is termed capacity building doesn't produce swift gains -- which is what O'Neill claims he wants to see. It's no surprise that there are people in the development community now talking about "multilateralism minus one". In other words, perhaps the entire world can go in one direction, without the US. It's a sad prospect, and difficult to construct both practically and politically, but how long can the desperately impoverished people of the world wait.
11:49:47 AM
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