Foreign aid can work wonders

Foreign aid can work wonders. It set South Korea and Taiwan on the path to riches, helped extinguish smallpox in the 1970s and has almost eliminated polio.

Aid can also burden weak bureaucracies in developing nations, distort markets, prop up dictators and help prolong civil wars.

A decade ago governments rich and poor set out to define good aid. They declared that aid should be for improving the lot of poor people [and] it should be coordinated.

Official development aid, which includes grants, loans, technical advice and debt forgiveness, is worth about $130 billion a year. The channels originating in Berlin, London, Paris, Tokyo and Washington are deep and fast-flowing; others are rivulets, though the Nordic countries are generous for their size.

More than two-fifths flows through multilateral outfits such as the World Bank, the UN and the Global Fund. Last year 9% was spent on refugees in donor countries, reflecting the surge of migrants to Europe.

[The Economist]

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