Does Aid Work?-for the MDGs

Abstract

"In 2005, the G8 leaders promised to double aid to Africa and the UN World Summit to increase total official development assistance (ODA) by around $ 50 bn. a year by 2010 to reach at least 0.5 per cent of donor countries’gross national product (GNP). The Summit recognised that such increases in ODA were required for achieving the Millennium Development Goals (MDGs). Aid volume targeting is not new; even in 1970 the UN set the ODA target of 0.7 per cent of the GNP of each economically advanced country, so far met by only five donor countries. The announcements of sharp increases in aid to developing countries have not been received only with cheers all around. An intense debate is taking place on whether this is the right road to take, considering the perceived macroeconomic risks and the large amounts of aid that have already been provided during several decades, while massive poverty persists in developing countries. The aid critique and the signs of political ‘aid fatigue’ have intensified in recent years; many point to free trade and private investment as better options. Yet, the decades of ODA have seen the largest poverty reduction in the history of mankind. The evidence indicates mostly that aid has contributed significantly to this, both via its impact on economic growth and through more direct interventions for human development (see page 10). In this issue of Poverty in Focus, various features of the current international aid system are discussed critically and constructively, with references to recent research literature on aid effectiveness and sharing of important and policy-relevant results." (...)