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   The Aid Trap
Reviewed by Sudhirendar Sharma
12 Jun 2010

Poverty is history, not yet

The Aid Trap shatters the well-entrenched myth that development aid will erase global poverty. Conversely, it argues that aid helps keep the poor alive to confirm the biblical certainty that 'the poor you always have with you'. Else, the trillions of dollars spent in development aid since the 1960s would have made a dent in poverty. Paradoxically, poverty has been perpetuated without any decline in the flow of development aid.

In the three decades that I've spent in the development sector, I haven't come across anything more clear, concise and incisive as The Aid Trap. It conclusively proves that the current systems of development aid and the nonprofit sector in the developing countries keep the poor poor. Neither does top-down aid that is often delivered to governments work, nor the bottom-up charity through non-profit system affect the poor.

Authors R. Glenn Hubbard and William Duggan, both of Columbia University's Business School, present a radical prescription to end poverty. 'Enhancing local businesses alone can generate jobs to tackle poverty', they suggest. The authors are seized of the fact that 'business is a very imperfect system' but leaf the history books to reveal evidences that give credence to their prescription that favors 'business' over 'charity'.

But if current economic crisis is any indication, should business be projected as a panacea? The authors favor local businesses over stronger foreign-owned businesses, though it will always be hard to draw a line between foreign and domestic firms. Rather then getting bogged down into the specifics, the crucial question worth addressing would be: 'what is the effect of your business on the domestic business sector'?

Curiously, there are no easy answers to global poverty yet. May be, a mix of strategies will contribute crucial pieces to the enduring poverty puzzle. However, by conclusively proving that development aid doesn't work, Hubbard and Duggan have set the pigeon out-of-the-hat. In doing so, they have reiterated the commonly-held adage which suggests that 'aid cannot be the answer if growth is the question'. But who decides what 'growth' is?

The Aid Trap: Hard Truths about Ending Poverty
by R Glenn Hubbard & William Duggan, Columbia University Press, New York, 198 pages, $ 22.95


 
 Other books reviewed by Dr Sudhirendar Sharma
Features > Book Shelf
 
Spoiling Tibet
Posting Date: 28 Feb 2014

A Journey in the Future of Water
Posting Date: 28 Feb 2014

Yamuna Manifesto
Posting Date: 28 Feb 2014

 
Corruption Watch

The bad news is that corruption has not only sustained but has grown in size and stature in the country. With scams being a regular feature, seventy per cent respondents in a survey have rightfully opined that corruption has continued to increase in India. One in every two interviewed admit having paid a bribe for availing public services during last one year. Transparency International's latest survey reveals that the political parties top the chart for the most corrupt public institutions, followed by police force and legislatures. No wonder, India continues to make new records on the global corruption arena!

The shocking revelation is that the health and education sectors haven't remained untouched by this phenomenon. With 5th and 6th positions respectively for these sectors on the public perception chart on corruption, corruption has crept insidiously into these sectors of hope for the masses. With bureaucracy being fourth in the list of corrupt institutions in the country, corruption seems to have been non-formally institutionalized with little hope if public services would ever be effective in the country. With economic growth having literally institutionalized corruption, are we now expecting corrupt to be socially responsible - a different CSR.

Poor. Who?

Not giving 'aid' to India is one thing but calling it 'rich' is quite another. If one in three of the world's malnourished children live in India, what does average daily income of $3 indicate? It perhaps means that there is a relative decline in poverty - people are 'less poor' than what they used to be in the past. But having crossed the World Bank arbitrary threshold of $2 a day does not absolve the 'developed' countries of their obligation to part with 0.7 per cent of their Gross National Income in development aid. Should this three-decade old figure not be revised?  

An interesting debate in UK's House of Commons delved on future of development assistance by the British Government. While prioritizing limited resources has been a concern, there has been no denying the fact that development aid must be guided towards tangible gains over a short period of time to start with. There are difficult choices for elected governments to make - should they invest in long-term primary education or in short-term university scholarships? Which of these will bring gains and trigger long-term transformation in the society. As politicians continue to be divided on the matter, poverty persists!!   

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Book Shelf

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