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World: Can Foreign Aid Do More Harm Than Good?

  • Julie Corwin --> Europe's Roma population are among the continent's poorest (file photo) (AFP) WASHINGTON March 22, 2006 (RFE/RL) -- A new book written by a former World Bank economist suggests that the prevailing approach to foreign assistance needs a dramatic overhaul. New York University professor Bill Easterly's book is called "The White Man's Burden: Why The West's Efforts To Aid The Rest Have Done So Much Ill And So Little Good." He argues that like the economic "shock therapy" programs advocated for Eastern Europe in the 1990s, the current plan to cut world poverty in half within the next decade may do more harm than good.

RFE/RL: In your book, you talk about two competing approaches to helping the world's poor, those of the "Planners" and the "Searchers". Explain the difference.

Bill Easterly: Planners are the aid agency managers at places like the UN, the International Monetary Fund [IMF], the World Bank and even political leaders from rich countries who think they know the answers to solving world poverty in advance. And they can just implement them by command. They tend to propose grandiose, comprehensive packages of lots of interventions that should all be done at once to end world poverty. There's currently a program by the United Nations and the World Bank and the IMF called the Millennium Development Goals. The problem with the Planners is that these plans include so many different actions and so many different actors that it's impossible to know what succeeded and what failed. And it's impossible to hold any actor, any one political leader, or any one aid agency, accountable.

RFE/RL: And who are the Searchers?

Easterly: Searchers are people like local social activists, private businessmen, working-level people at aid agencies and nongovernmental organizations, who just try to find one thing at a time that will effectively help the poor help themselves. And, the Searchers don't say that they know the answers in advance. They realize just how difficult it is to implement such a simple intervention like distributing bed nets to prevent malaria. They adjust on the ground to local realities. And most importantly, they accept responsibility and accountability for their actions.

RFE/RL: Could you give us an example of Searchers' style of program?

Easterly: There is a program in Mexico called Oportunidades, which means opportunity. This is a locally designed program. It hit upon the idea of encouraging school attendance and fostering good health for children by making cash payments to mothers conditional on their children attending school. And there were some other conditions like taking the child in for regular nutritional check-ups. And this program started on a very small scale and now this program is been implemented country wide. What's more, it's spreading to other countries in Latin America and I would expect it to spread to other countries in the world.

RFE/RL: What about in former Soviet Union? Russia? Ukraine? Are there any examples in these countries of Searcher success stories?

Easterly: I'm laughing because the former Soviet Union is kind of the worst possible case of Planners run amok. I laugh because it's so ridiculous how the West behaved there -- I certainly don't laugh about the tragedies that the citizens of these countries have had to endure because of the failure of foreign aid and the bumbling of outside aid agencies. What happened there is deeply ironic because these were places that did have five-year plans. And now you sort of have a new kind of five-year plan, which was to impose a free market overnight.

RFE/RL: Do you believe that right now most foreign assistance projects do more harm than good?

Easterly: There are a lot of projects that are doing harm. One kind of program has been this attempt at really crude arm-twisting through conditional aid loans call structural adjustment loans from the IMF/World Bank. These loans sound good because you don't want to give aid to corrupt or autocratic, dictatorial governments. You don't want to give aid to governments that mismanage their economy. My answer in those cases would be just don't give aid to those kinds of governments. But instead what the structural adjustment loan does is it tries to make the aid conditional on government changing its behavior. There's no evidence that you actually ever succeed in getting governments to change their behavior.

RFE/RL: By your own account, Planners populate the offices of the UN, World Bank, and the IMF. Should these organizations continue to exist? Should they continue in the business of providing foreign assistance business?

Impoverished children in Bishkek, Kyrgyzstan (AFP file photo)

Easterly: I do think they should continue to exist because I think there is some hope in shifting power in those organizations from Planners to Searchers. Actually the field-level staff that I know in the World Bank, for example, actually do think much more pragmatically like Searchers. If they were freed of some of the bureaucratic nonsense that they have to put up with now, which rewards them for producing tons of reports about the grandiose goals, such as the Millennium Development Goals to cut world poverty in half by 2015, [they might achieve some positive results.]

RFE/RL: Why do these grandiose goals get formulated? Perhaps if you talk about foreign aid realistically, then maybe it's hard to mobilize support? If you say, "Look we're not going to eradicate poverty, maybe we can at best help at the margins," then people are not going to be motivated to give....

Easterly: I don't think fooling people into giving aid is a good political strategy in the long run. There has been even more grandiosity lately with [Harvard economist] Jeff Sach's work on the end of poverty. What's going to happen I'm afraid in the next few years is that there's going to be a backlash when people realize that these grandiose goals are not obtainable with foreign aid, and then they'll just want to give up on aid altogether.