…Robert Calderisi, a humanitarian who has had plenty of experience in Africa, calls for aid cuts in The Trouble with Africa: Why Foreign Aid Isn't Working. Calderisi is a Canadian who spent three decades at the World Bank dealing with development problems. His book is more focused on Africa, while [William] Easterly [author of The White Man’s Burden: Why the West’s Efforst to Aid the Rest Have Done So Much Ill and So Little Good] concentrates on aid in general, but they make similar arguments and, in some respects, have similar prescriptions. Calderisi emphasizes that the problem of aid is not just a matter of quantity:
Almost everyone in North America and Europe who shares my ideals believes that more aid, along with additional lecturing on governance, will help Africa. I want to puncture that illusion. Africans need breathing space much more than they need money. Not a Marshall Plan, but real backing for the few governments that are fighting poverty, plus political support for the millions of Africans who are resisting oppression and violence in the rest of the continent.
At the end of his book, in a chapter offering a series of specific recommendations, Calderisi suggests cutting direct aid to individual countries in half. He explains: “Contrary to conventional recommendations, direct foreign aid to most African countries should be reduced, not increased.” In his view “most” African governments are using aid corruptly, ineffectively, and wastefully. Helping people who seek different political arrangements at least offers the hope that governments may change their ways or be replaced.
Both Easterly and Calderisi argue that the world concentrates too much on amounts of aid given and not enough on how well it works …
…Several studies have shown no overall connection between aid and growth. But one very important study, by the economists Craig Burnside and David Dollar in 2000, found that aid did boost growth in countries with good governance. So that conclusion has become the new conventional wisdom, and it's partly behind the effort in the US Millennium Challenge Accounts, a new federally sponsored aid program, to channel assistance only to countries that are less corrupt and better managed.
Unfortunately, Easterly repeated the study by Burnside and Dollar but drew on a larger pool of data. This time he found no evidence that “aid works in a good policy environment.” Raghuram Rajan and Arvind Subramanian of the International Monetary Fund came to the same conclusion, and they also suggest a reason. After closely examining the evidence they concluded that “aid inflows have systematic adverse effects on a country's competitiveness.”
From Kristof, Nicholas, “Aid: Can it Work?” in The New York Review of Books, October 5, 2006, p. 41
Amartya Sen has some thoughts about Easterly’s book.