Waylaid Dialectic

July 20, 2011

Not quite so black and white Mr White

Filed under: Aid — terence @ 3:36 pm

Over at the Age, Hugh White has an Op-Ed claiming that aid money is wasted money. By the standards of Australian media commentary on aid, it is remarkable cogent.

His argument is basically this: Growth not aid lifts people out of poverty. Therefore aid is wasted.

I take issue with this over at Dev-Policy.

The very short version of my argument is that White is wrong to claim that aid definitely has no positive effect on growth. If anything it likely has a small positive effect in the average aid recipient country.

Also, growth can help dramatically with poverty reduction, but not all growth is equal: whether growth is pro-poor or not varies considerably across place and across time. Similarly, where growth leads to improvements in other areas of human welfare (health and education, for example) varies too. Growth is important in improving the quality of life of people living in developing countries but it’s not the only thing that matters.

It’s not the only way quality of life can be improved either. As Charles Kenny shows in ‘Getting Better’ other welfare indicators can improve even in the absence of growth. And, arguably, aid has a much better track record in these other areas.

Aid is no panacea. But when given well it can help. Good luck trying to convince any one writing for an Australian newspaper opinion page of this though.

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5 Comments

  1. Shorter Hugh White: I’d have much preferred an extra $4bn/year go to Defence not DFAT. Because $4bn/year spent on Defence is much less of a waste. Obviously.

    Comment by C-sez — July 20, 2011 @ 5:39 pm

  2. Hhhmmm…yes, it’s interesting that we have such fierce debates about the efficacy of aid, while other spending areas are effectively out of bounds for discussion.

    Comment by terence — July 20, 2011 @ 8:18 pm

  3. Shorter Shorter Hugh White: My Friends At DFAT Went To Aid-Disney-Land And All I Got Was This Lousy UNSC Seat.

    Comment by Cynan Houghton — July 21, 2011 @ 12:06 am

  4. Following White’s logic, the Australian government should stop providing education to Australians, since this just displaces the money they would otherwise spend on education and allows them to spend it on less important things (such as food and housing, I guess), and anyway, it’s economic growth that makes people richer, not education (and I can’t hear anyone saying that economic growth requires an educated population because I’ve got my fingers in my ears nyaah nyaah).

    Comment by Sam Buchanan — July 21, 2011 @ 10:42 am

  5. 🙂

    Comment by terence — July 22, 2011 @ 6:56 am


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