Degree of success or failure of international aid
Aid effectiveness is the degree of success or failure of international aid (development aid or humanitarian aid). Concern with aid effectiveness might be at a high level of generality (whether aid on average fulfils the main functions that aid is supposed to have), or it might be more detailed (considering relative degrees of success between different types of aid in differing circumstances).
Questions of aid effectiveness have been highly contested by academics, commentators and practitioners: there is a large literature on the subject. Econometric studies in the late 20th century often found the average effectiveness of aid to be minimal or even negative. Such studies have appeared on the whole to yield more affirmative results in the early 21st century, but the picture is complex and far from clear in many respects.
Many prescriptions have been made about how to improve aid effectiveness. In 2003–2011 there existed a global movement in the name of aid effectiveness, around four high level forums on aid effectiveness. These elaborated a set of good practices concerning aid administration co-ordination and relations between donors and recipient countries. The Paris Declaration and other results of these forums embodied a broad consensus on what needed to be done to produce better development results. From 2011 this movement was subsumed in one concerned more broadly with effective development co-operation, largely embodied by the Global Partnership for Effective Development Co-operation. 
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The concept of aid effectiveness.
Any discussion of "effectiveness" must rely on understandings or assumptions about aims. In public discussions of aid effectiveness, the general aim is usually assumed to be boosting the development of recipient countries and, hence, the well-being of people living in them. But "development" and "well-being" are complex and slippery concepts. The most popular summary indicator for a country's development is probably average national income per head in its population, but this indicator does not capture inequalities of wealth and power, or the structural characteristics of the country's institutions and economy. Since the 1990s the prime purpose of aid has widely been seen as poverty reduction, but this, too, can be interpreted in a variety of ways (How soon? How sustainable? What level?). Such ambiguities should be clarified or at least borne in mind when considering aid effectiveness.
Under the main international definition of aid – Official Development Assistance – any self-seeking motives of aid donors are supposed to be strictly subordinate to the objective of promoting the economic development and welfare of developing countries. Such motives – which may involve strategic alliances, diplomatic trade-offs, commercial advantages and other political benefits – are nowadays usually discussed as obstacles to aid effectiveness rather than alternative aims.
In the first decade of the 20th century, "aid effectiveness" was the declared focus of a movement joined by major donor and recipient countries and aid-related organisations, involving a series of high level forums on aid effectiveness. The agenda of this movement was largely about good practices in donor-recipient relationships, and in some cases these good practices became seen as proxies for aid effectiveness.
History.
The historical themes of aid effectiveness are rather different for humanitarian aid and developmental aid, so these have been treated in different sections below.
Development aid effectiveness (historical perspective).
1945 – early 1970s: Post-war boom.
Although US aid is widely credited with having hastened the reconstruction of western Europe after World War II, there have been doubts about the effectiveness of this aid. G. A. Duncan in 1950 deplored the governmental character of Marshall Aid, arguing that private loans could have achieved the economic purposes more efficiently. He acknowledged that the provision of official aid also had other – political – purposes.
When US economic aid shifted from Europe to poorer countries – as initially signalled by President Truman in Point Four of his 1949 inauguration speech – the strategic framework was one of building a "free world" in the face of communist threat. In the 1950s, official US development assistance was mobilized alongside military aid within the Mutual Security Program. A 1957 Senate Special Committee report admitted it was impossible to prove how effective US aid since World War II had been, but considered that, without it, several countries might have been lost to the Soviet Union's sphere of influence. For greater clarity in future, the committee attempted to distill the purposes of US aid into four:
The first of these aid drivers could be seen, during the Cold War, as part of a competition with the Soviet Union to win influence. But aid was often observed to fail in this respect; for instance, in the 1950s and 1960s Egypt and Afghanistan took aid from both sides without making a decisive commitment either way, and large Russian support to China and Indonesia did not prevent those countries' leaders turning against their former patron.
A more detailed theory about the kinds of effect and the causal paths through which aid could be effective was developed by Max Millikan and Walt Rostow in the mid- to late-1950s, expressed in of 1956. This propounded that aid in the form of investment funds could promote the "take-off" of economies into self-reliant growth. It further suggested that this economic transformation, channeled properly, could produce a free and democratic type of society by providing: a constructive outlet for nationalism; a social solvent by interesting the urban elites in a dynamic agricultural sector; a stimulus for the emergence of authentic leaders; incentives for the attitudes of political responsibility needed to support democratisation; and feelings of international solidarity. Rostow later elaborated the "take-off" theory of development in his more famous work, , in which he stated that greatly increased economic aid was needed in order to outrace the effects of population growth.
In 1966, Hollis Chenery and Alan Strout published a still more sophisticated and influential macro-economic model of the way aid could boost development. It involved identifying for each country whether the bottlenecks to economic growth lay in the availability of skills, domestic savings, or export earnings. In this way, an appropriate mix of technical assistance, grants or loans could be decided. The focus was on achieving a target level of GNP growth, which helped consolidate this as the prime indicator of aid effectiveness. At this time Chenery and Strout pointed to the Philippines, Taiwan, Greece and Israel as examples of countries that seemed to have achieved self-sustaining growth rates with the help of aid.
Early 1970s – mid-1990s: The rise of neoliberalism.
The end of the post-war boom – marked particularly by the oil crisis of 1973 – was a watershed in attitudes to aid effectiveness, as it forced a reappraisal of the existing models.
In the 1980s and 1990s NGOs played a greater part in international aid.
After the end of the Cold War, the declared focus of official aid began to move further towards the alleviation of poverty and the promotion of development. The countries that were in the most need and poverty became more of a priority. Once the Cold War ended, Western donors were able to enforce aid conditionality better because they no longer had geopolitical interests in recipient countries. This allowed donors to condition aid on the basis that recipient governments make economic changes as well as democratic changes. It is against this background that the international aid effectiveness movement began taking shape in the late 1990s as donor governments and aid agencies began working together to improve effectiveness.
Late 1990s onward: Millennial partnerships.
"The global "effectiveness" movement".
Aid effectiveness became more strongly recognized as a global multilateral objective in 2002 at the International Conference on Financing for Development in Monterrey, Mexico, which established the Monterrey Consensus. There, the international community agreed to increase its funding for development—but acknowledged that more money alone was not enough. Donors and developing countries alike wanted to know that aid would be used as effectively as possible. They wanted it to play its optimum role in helping poor countries achieve the Millennium Development Goals, the set of targets agreed by 192 countries in 2000 which aimed to halve world poverty by 2015. Over the following nine years, a process punctuated by four high level forums on aid effectiveness (Rome 2003, Paris 2005, Accra 2008 and Busan 2011) consolidated a set of recognised good practices in aid effectiveness, and a framework for monitoring them.
In 2011 the dominant global agenda on "aid effectiveness" was subsumed in a broader movement for "effective development cooperation". This was embodied in the Global Partnership for Effective Development Co-operation (GPEDC) mandated at the Fourth High-Level Forum on Aid Effectiveness in Busan in 2011. GPEDC endorsed the prior "aid effectiveness" principles and commitments, and added others more widely concerned with development cooperation.
Another global partnership that follows the "effective development cooperation" approach is UHC2030 (the International Health Partnership for Universal Health Care 2030), formerly known simply as the International Health Partnership (or IHP+).
See below for more details of the aid effectiveness principles and practices advocated by this movement and its component partnerships.
Humanitarian aid effectiveness (historical perspective).
Widespread famine in Biafra during the Nigerian Civil War (1967–1970) led to greater NGO involvement in events like the Biafran airlift being attempted for the first time. The way in which aid was allocated during the 1983–1985 famine in Ethiopia forever changed the way in which governments and NGOs respond to international emergencies taking place within conflict situations and raised disturbing questions about the relationship between humanitarian agencies and host governments.
Findings and critiques on aid effectiveness.
There is wide agreement that aid alone is not enough to lift developing countries out of poverty and that it is not the most powerful potential instrument for promoting this end. The debates on aid effectiveness are over the degree of significance of aid's effects, the extent of its unfavourable effects, and the relative effectiveness of different kinds of aid.
Major critiques.
P. T. Bauer.
British economist P. T. Bauer argued that aid did more harm than good, notably in his books "Dissent on Development" (1972) and "Reality and Rhetoric" (1984). The main harmful effect was that aid channelled resources through governments, enabling inefficient state planning and producing a general "politicization of life" in which the population shifted its activities to the political sphere rather than the economic one. On the other side, Bauer saw aid's benefits as being limited to the avoidance of commercial loan costs, which he did not consider to be a significant factor in countries' development (pp. 47–49). He believed that the choices of aid projects were usually controlled by recipient governments less interested in alleviating poverty than enriching the elite (pp. 49–52).
Dambisa Moyo.
Noted Zambian economist Dambisa Moyo has been a fierce opponent to development aid, and calls it “the single worst decision of modern developmental politics”. Her 2009 book, Dead Aid describes how aid has encouraged kleptocracies, corruption, aid-dependency and a series of detrimental economic effects and vicious downward spirals of development in Africa. She argues that foreign aid provides a windfall to governments which can encourage extreme forms of rent-seeking and through providing a positive shock of revenue, lead to Dutch Disease. Furthermore, this easy money offers governments an exit from the contract between them and their electorate: the contract that states that they must provide public goods in exchange for taxes. In short, it "allows the state to abdicate its responsibilities toward its people". It is important to note that Moyo alludes specifically to government bilateral and multilateral aid and not small-holder charity, humanitarian or emergency aid.
Her prescriptions call for increased trade and foreign direct investment, emphasizing China's burgeoning role in Africa. Moyo also makes a case for micro-financing schemes, as popularized by the widespread success of Grameen Bank, to spark entrepreneurship within the continent on the ground level, thus building from the bottom-up as opposed to the top-down approach aid takes.
Econometric Studies.
Many econometric studies have attempted to establish broad conclusions about aid, using regression analysis on a panel of recipient countries (seeing if their differing amounts and timings of aid received could be correlated with development indicators). These have created a mixed picture on the average effectiveness of aid, but one in which pessimism in the late 20th century has seemed to yield to qualified optimism in the early 21st century. See the table in the sub-section on "Major econometric studies and their findings", below.
Challenges for measurement.
It must be borne in mind that such econometric studies face many problems. One challenge for