When more development assistance is helpful

Would more development assistance contribute to achieving the Millennium Development Goals (MDGs)? Many people doubt it and speak to counterproductive results of more aid. According to this new report by the International Poverty Centre, a joint undertaking by the UNDP and the Brazilian government, many of these arguments are either unfounded or exaggerated. Finn Tarp, for example, argues that many empirical studies clearly refute the claim according to which aid hardly contributes to economic growth. Patrick Guillaumont emphasises that aid is actually often extremely effective in very poor countries. It alleviates the impact of external shocks such as export-price volatility or the HIV/AIDS pandemic, thus propping up the productive potential of economically vulnerable countries. Most of the articles, however, advocate sweeping reforms in the allocation of development assistance – not least, to make it become more reliable. (bl)