"AID IMPEDES DEVELOPMENT, IT DOES NOT PROMOTE IT”

"Aid impedes development, it does not promote it”



Table of contents

Introduction3

Development and the Policies Of Developing Countries4

Liberalization and regulation5

Direct assistance to the poor7

Issues under investigation8

Which specific economic policies best promote growth?9

Which specific governance reforms work, and under what conditions?10

Development Policy and The Effectiveness Of Specific Interventions To Reduce Poverty11

Health care interventions and health care delivery12

Income support and labor market interventions13

Agriculture and environment13

Issues under investigation14

Development Policy and the Unique Conditions That Disadvantage Developing Countries15

The Policies of Developed Countries18

Issues currently under investigation20

References23

"Aid impedes development, it does not promote it”

Introduction

While the developing world as a whole has made huge strides against poverty over the last 20 years, progress has been highly uneven. The persistence of poverty in many countries

a source of both concern and impatience in the policymaking and development communities. After 50 years of experience and effort, the argument goes, why have we not made greater progress in all developing countries? Why is sustained growth elusive and aid effectiveness uncertain? Tempering their impatience, these same communities recognize that economic development is a poorly understood phenomenon. So a key part of development policy is not only to implement effectively reforms that work, but also to discover what those reforms should be(Kessides, 2004).

The Bank, through pilot programs, through the analysis and evaluation of operational experience and through research has made great progress on the knowledge agenda. Knowledge, lending, and learning have proven to be mutually reinforcing activities, and the Bank is the leading development institution in exploiting these synergies. Knowledge generated by research is a key input into the design of Bank programs and lending, and the Bank's knowledge itself a key selling point to clients. Through lending, we learn more about what works in development, and through research, this learning adds to the Bank's knowledge base.

But important gaps remain in our understanding of how the policies of both developed and developing countries affect development goals. This note offers a brief outline of key policy insights from the knowledge-lending-learning cycle and of some of the important gaps that remain. These insights relate to how the policies of developing countries could be improved to accelerate development, whether specific interventions to reduce poverty are really effective, what policies best address the unique disadvantages that many developing countries confront, and how the policies of developed countries could best be reformed to promote development(Bergoeing, 2004, p473). For each of these four areas, this note summarizes key findings in past research and the current efforts to understand remaining puzzles.

Development and the Policies Of Developing Countries

Development advice focuses mainly on steps that developing countries should take to improve their development chances. From macroeconomic, trade, and environmental policies social services and firm and financial regulation, we know much more about the contribution that developing country policies make to growth and poverty than we did 15 years ago. Recent discoveries have influenced the Bank's policy advice in a wide range of areas(Knack , 1995, p207).

Liberalization and regulation

Agricultural liberalization—more than trade liberalization—has driven poverty reduction in ...