Aid as a Second-Best Solution: Seven Problems of Effectiveness and How to Tackle Them

Abstract

Most rich countries developed without aid, and this ‘self-development’ has some intrinsic advantages. In today’s massively unequal world, however, such an approach would imply very low levels of human development for several generations for many poor countries. Aid can therefore usefully be thought of as a necessary but ‘second-best’ solution. The challenge then is how to manage this second-best solution, particularly in the more aid-dependent states and the more fragile environments, in order to achieve sustainable results. The study examines seven problems that can limit the effectiveness of aid, and suggests possible ways of tackling them