April, 2006

The Last Word

by William Easterly

April 20th, 2006

The aid debate ends with a whimper; let’s try a bang.
Dr. Radelet seems to have given up trying to make the case that aid raises growth in favor of a heavily hedged statement that aid on some planet sometimes, somewhere does something positive.
Professor Lal and Dr. Milanovic have a conversation on empires, global government, and [...]

Read: The Last Word

The Challenges of the Millenium Challenge Account

by Steve Radelet

April 19th, 2006

One of the most innovative ideas in recent years of how to deliver aid more effectively is the Millennium Challenge Account. It is based on several sensible principles:
1. Choose countries with a demonstrated record (not promises) of decent governance and reasonable health, education, and economic policies;
2. Give those countries greater say in setting priorities and [...]

Read: The Challenges of the Millenium Challenge Account

Five Ways to Make Aid More Effective

by Steve Radelet

April 19th, 2006

So the evidence on aid indicates a mixed but somewhat positive record: modest results in many places, strong results in a few, and failure in others. This track record leaves substantial room for improvement. What are some of the key ways that aid can be made more effective in the future?
First, donors should separate politically-motivated [...]

Read: Five Ways to Make Aid More Effective

Last Rejoinder to Milanovic

by Deepak Lal

April 19th, 2006

Milanovic must live on another planet if he thinks that China and India in pursuit of a multi-polar world will promote a Tobin tax. Having been involved with policy discussions in these two countries for the last few decades, the Tobin tax has never been and is still not even on their distant horizon. I [...]

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Rejoinder to Lal: Global Welfare, Empire, and Playing God

by Branko Milanovic

April 18th, 2006

I am glad that Deepak Lal has not waited in vain for a Tobin Tax discussion. I cannot speculate when and if the US congress might agree to divest itself of some of its tax-raising powers. Indeed, with the current mood in the country and the current crop of politicians sitting in the Congress, it [...]

Read: Rejoinder to Lal: Global Welfare, Empire, and Playing God

Response to Milanovic on the Tobin Tax, Empire, and Migration

by Deepak Lal

April 18th, 2006

I wondered when the Tobin Tax would come up! This concept envisages taxing financial transactions around the globe to throw some sand into financial markets to tame their volatility. The proceeds to be given to the UN to hand out as welfare payments to the world’s poor may have been endorsed by the World Bank’s [...]

Read: Response to Milanovic on the Tobin Tax, Empire, and Migration

Taking the “Con” Out of Aid and Growth Econometrics

by William Easterly

April 17th, 2006

Let’s take the “con” out of aid and growth econometrics.
Steve Radelet seems to be retreating from his claim that aid (unconditionally) raises growth (his original paper was one source of what he now says is the “fictitious” claim that “the impact is large”). Radelet now only claims a “modest” effect. Of course, even modest effects [...]

Read: Taking the “Con” Out of Aid and Growth Econometrics

New in the Cato Journal: Does Foreign Aid Help?

If you’re interested in this issue of Cato Unbound, you’ll certainly want to read the lead article in the newly released edition of the Cato Journal: “Does Foreign Aid Help?” [pdf] “In this article,” Simeon Djankov, Jose G. Montalvo, and Marta Reynal-Querol write,
we show that foreign aid has a negative impact on the [...]

Read: New in the Cato Journal: Does Foreign Aid Help?

Tobin Tax, Imperialism, and Globalization

by Branko Milanovic

April 17th, 2006

One (of the many) differences between Professor Lal’s views and mine is that I believe that good things may happen in the future (though I cannot demonstrate they will), while he believes that good things did happen in the past or are happening today (but, unfortunately for his case, they can be demonstrated to [...]

Read: Tobin Tax, Imperialism, and Globalization

Econometrics, Global Welfare, and Palliative Measures

by Deepak Lal

April 17th, 2006

Far be it from me to enter into the war of the econometricians between Bill Easterly and Steve Radelet. It is reminiscent of the similar war conducted by Rodrik and Sachs and Warner on the case for trade openness. As two eminent economists of an older generation who take a skeptical view of the current [...]

Read: Econometrics, Global Welfare, and Palliative Measures

Remittances Aren’t Aid

by Branko Milanovic

April 16th, 2006

In my initial post I mentioned that real aid (unrequited transfers to unattached individuals in foreign countries, and loans with a large concessional element) is often intentionally bundled together with other “things” like quasi-commercial loans, and even loans with many conditionalities, as most of World Bank’s and all of IMF’s loans are, to give the [...]

Read: Remittances Aren’t Aid

The Record of Aid in a Complex World

by Steve Radelet

April 13th, 2006

In his response, Dr. Easterly uses an old tactic: he creates fictitious positions and attributes them to me, then attacks them. Just to set the record straight before getting on to more interesting substance: He claims I said that aid “accomplishes miracles of raising growth.” I actually wrote that “aid has achieved very modest results [...]

Read: The Record of Aid in a Complex World

Why Not a Global Welfare Agency?

by Branko Milanovic

April 13th, 2006

There are two additional points I would like to make regarding aid. First: we all are concerned (upset, unhappy) about the fact that aid is not efficient as it could be. The minimum that aid should accomplish however is to ensure progressive transfers at the global level. This means that aid money should flow from [...]

Read: Why Not a Global Welfare Agency?

Reply to Comments: Logic Beats Illogic, Every Time

by William Easterly

April 12th, 2006

I thank my colleagues for providing thoughtful and spirited comments.
The most spirited part of the debate is provided by Dr. Radelet. I hardly need to argue with Dr. Radelet, as he spends most of the time arguing with himself. Aid amounts to virtually nothing, yet accomplishes miracles of raising growth and saving lives. Aid is [...]

Read: Reply to Comments: Logic Beats Illogic, Every Time

Reply to Easterly: Evidence Beats Rhetoric, Every Time

by Steve Radelet

April 9th, 2006

The Center for Global Development’s Steve Radelet argues against Easterly that, in fact, “aid amounts have been modest” and that the evidence shows that aid is often effective. Without successful health interventions, “millions of these people would be dead,” Radelet writes. Furthermore, he argues, aid does promote economic growth. “Here is the dirty little secret: most of the published research over the past decade has shown a modest positive relationship between aid and growth.”

Read: Reply to Easterly: Evidence Beats Rhetoric, Every Time

Reply to Easterly: There is No Fix for Aid*

by Deepak Lal

April 6th, 2006

In his reply essay, Deepak Lal, the James S. Coleman Professor of International Development Studies at UCLA, argues that like almost all aid efforts, Easterly’s proposed evaluation initiative is likely to fail. “Short of direct or indirect imperialism,” Lal argues, “there seems to be little hope of overcoming the domestic political obstacles to the efficient utilization of foreign aid.” Easterly’s proposal is just more fodder for the “Lords of Poverty,” the middle class professionals who derive a good living from the international business of alleviating world poverty.

Read: Reply to Easterly: There is No Fix for Aid*

Reply to Easterly: Thought-Provoking and Misleading

by Branko Milanovic

April 5th, 2006

In his spirited reply to this month’s lead essay the World Bank’s Branko Milanovic claims that William Easterly’s argument is misleading. Easterly, Milanovic argues, is not clear about the definition of “aid,” and he both underestimates how much governments can do to help the poor and overestimates the likely effectiveness of his proposed new “grandiose bureaucracy” to assess aid effectiveness. Easterly, Milanovic writes, “provides an argument for those who have long argued that the best policy is to do nothing and ignore the poor world.”

Read: Reply to Easterly: Thought-Provoking and Misleading

Why Doesn’t Aid Work?*

by William Easterly

April 3rd, 2006

It is a tragedy that billions suffer from extreme poverty. The second tragedy of the world’s poor, William Easterly maintains in this month’s lead essay, is that trillions spent on foreign aid have done so little to help. Aid efforts so rarely succeed because they so often lack feedback and accountability. The way forward, Easterly argues, is “truly independent scientific evaluation of specific aid efforts . . . continuous evaluation of particular interventions from which agencies can learn.”

Read: Why Doesn’t Aid Work?*