Giving to Developing Countries: Controversies and Paradoxes of International Aid

According to the Development Assistance Committee (DAC) of OECD, US$2.2 trillion dollars have been provided in various forms to developing countries since 1950. This paper serves to highlight that while the topic of aid has been a highly controversial one in both donor as well as recipient countries, there has been little long-term evaluation of the impacts of aid and its effectiveness in contributing to the capacities of countries to improve their incomes and human development over time. This paper begins by breaking down aid flows since 1960, describing the magnitude and composition of those flows, before posing a set of philosophical questions regarding aid. These questions highlight the controversial nature of aid architecture by inquiring about the level of leverage aid has on policy decisions, the extent to which aid should rely on local versus global comparative knowledge, and if aid should be conditioned on the fulfillment of prior conditions. The paper also explores the institutions, mechanisms and impacts of aid, concluding by asserting that negative evaluations of the impact of aid in developing countries do not match the facts. Impact assessment is complicated and there have not been enough long-term evaluations conducted to be able to definitively argue that “aid is dead.”