Fund What Works
The problem isn't whether we are too generous or too stingy. We just need to help the poor help themselves.
Everyone shares a good deal of cynicism about foreign aid. Taxpayers in developed countries complain that aid is often spent on inflated bureaucracies at home, that it ends up in the Swiss bank accounts of dictators of developing countries, or that it is wasted on useless, if well-intentioned, projects. Governments and citizens in poor countries resent the use of aid as a means of buying political support, their lack of control over it, the development fads to which it is subject, and the administrative burden that accompanies it.
In response, some critics suggest we give up on it altogether. But renouncing essential human solidarity is morally unacceptable and politically risky. It would send a tremendously negative message to the world’s poorest people. Others suggest instead that foreign aid should be increased several-fold, in a big push to eradicate poverty throughout the world. Unfortunately, though, the track record on the ability either to raise considerable amounts of aid money or to spend it well is less than stellar.
The solution is an essential reform of how we allocate foreign aid. First, a substantial fraction of aid should be set aside to help countries experiment and evaluate solutions to the fundamental problems of their poorest citizens, using the same level of rigor as is used for testing new drugs. Most of the rest (excluding disaster relief) should be used to support the expansion of those projects that are proven to be effective. Poor countries demonstrating the will to implement projects placed on an approved list should be entitled to financial support and the required technical help to do so. Countries that want money to try something that is not on the list should be given access to pilot-program financing, on the condition that their evaluation plans are sound, and that they accept strict monitoring of its implementation. Indeed, if this idea were implemented today, a number of projects would already qualify for expansion, including presumptive deworming of all children in affected regions and incentives for parents to immunize their children.
Under this proposal, most of the aid money would be spent on programs with a proven, transparent record of success. It would be possible to calculate how many lives a given project saves, or, say, how many kids are sent to school, mitigating cynicism both in rich and poor countries. The arbitrariness with which recipient countries and projects are now selected would disappear. Funding would be conditional on actual implementation of the plans, avoiding waste. This accountability would justify increasing aid flows, helping the fight against world poverty.
Spending aid effectively and rationally is possible today. Demonstrating the political will to do so would restore the confidence the world is quickly losing.