Halving poverty by doubling aid: how well founded is the optimism of the World Bank?

This report constitutes a challenge to the effectiveness of the World Bank's strategy of concentrating, and thereby increasing, aid on countries with 'good' policies.The arguments used against the World Bank policy include:an analysis of the inconsistent relationship between economic growth and levels of aid delivery in Sub-Saharan Africa, North Africa and South Asia, raises considerable doubt concerning the robustness of the aid-economic growth nexusthere is evidence to demonstrate that aid can actually impair the quality of the recipients' domestic policiesthe rigid distinction used by the World Bank between "good" and "poor" policies is conceptually questionable, unstable and generally flawed because of the lack of consideration given to endogeneity issues and the possibility of changing behaviourpoor countries suffering from public institutions in decay and from bad neighbourhood, require new approaches of channels of aid allocationgeopolitical targets may reemerge after the end of Cold War in the aftermath of the events of 11 September 2001 and thereby undermine aid allocations based on 'good' or 'bad' policies.This assessment raises doubts that the direct transmission channel via the government of the recipient country is the most appropriate way to help the poor. Indirect ways seem more promising, provided that they address the most urgent needs of people living in poverty. Aid should, for instance, focus on easing bottleneck factors whose social rates of return can be shown to exceed the private rates, possibly research and research implementation in areas like health, nutrition, education, institution building, IT infrastructure, and public management.In conclusion, the author asserts that raising aid effectiveness is a matter of improving the framework conditions, of setting new priorities and of finding new operational means. The priority is poverty reduction and the way to this target is paved with the cornerstones labeled new technologies for health, education, public management and information dissemination.