How The Aid Industry Works By Arjan De Haan

In a chapter of his book entitled How the Aid Industry Works, Arjan de Haan presents four main challenges facing the aid industry as a whole in the twenty-first century. First, he argues that the number of relevant actors has increased, posing challenges of coordination and increasing the potential for conflicting approaches. He provides the following example to back up this claim: “the focus of China’s aid on infrastructure is generally regarded as very welcome, because this has been an area that the old donors have tended to neglect, but China’s insistence on noninterference can be at odds with the old donors’ emphasis on promoting good governance as a precondition for development.” This challenge is particularly relevant for the Bretton Woods …show more content…
He conveys two sides of this debate. The first is attributed to thinkers such as Jeffrey Sachs, who use macro indicators and economic growth to show that aid works, and “reject arguments that increases should be conditional on improved governance.” The second side includes “those who argue that one cannot prove that aid causes growth rather than the other way around, or that macro analyses cannot be relied upon.” This side argues against a grand plan for development. The primary challenge stemming from this debate, according to de Haan, has focused on the capacity of recipients to make effective use of aid flows to reduce poverty. He argues that “though the aid industry now has a much better understanding of the importance of good policies, or governance, for development and poverty reduction, it has—at the same time— learned that it is extremely difficult to change policies.” Thus, overall this challenge pertains to the question of whether to spend increased aid flows where there is need or where the recipients have the greatest capacity to make efficient use of the