December 1, 2009

What Can Aid Do?

  • Peter Leeson

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
  • David Skarbek

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Read the article at Cato Journal.

Foreign aid’s advocates claim aid has been successful. Aid’s  critics claim aid has failed. We explain why both camps are correct. Aid can,  and in a few cases has, increased a particular output by devoting more resources  to its production. In this sense, aid has occasionally had limited success.  However, aid can’t, and hasn’t, contributed to the solution of economic problems and  therefore economic growth. In this much more important sense, aid  has failed.