Law of aid, according to Dollar
FOREIGN aid could reduce poverty - provided it is targeted at poor countries with good policies.
This is the opinion of David Dollar, who co-authored with Lant Pritchett a World Bank report entitled Assessing Aid: What Works, What Doesn't, and Why. He was speaking at the SA Institute of International Affairs on Friday.
Dollar says a mixture of good policies - openness to trade, rule of law and macroeconomic stability - and increased foreign aid spurs growth and reduces poverty. "There is evidence to show that in low-income countries with good policies, aid spurs economic growth and reduces poverty."
Figures show that countries with good policies, but which receive little aid, show a 2.2% increase in per capita incomes. Those with good policies and more aid show growth of 3.7%. These countries include Botswana, Uganda and Ghana, which have gone from crisis to rapid development since the '60s.