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If there is so much aid in developing countries, why poverty is increasing in these regions and the industrialized world?

I'm doing a question for my project. Not only that poverty is increasing in the developing world for the worse, it is increasing in the industrialized world, especially the United States.


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  • Dec 10 2012: One thing that money can't buy is poverty. In developing and industrialized countries, the poor lack savings because of the social order (local politics, laws, regulations, and practices) that determine the distribution of power and income. The policies that maintain the social order are influenced and maintained by the very same governments that are entrusted with conduct of "poverty alleviation" programs. It is easy to misuse poverty alleviation funds because the poor are not powerful constituents. If policymakers do not misuse poverty alleviation funds, aid definitely works, as during the Marshall Plan. But, not surprisingly, there is a correlation between low marks on the Transparency international corruption index and underdevelopment. The 1998 World Bank publication, "Assessing Aid--What Works, What Doesn't, and Why," calls these countries with low marks, "unreformed countries" and correctly concludes that aid does not work in unreformed countries. In addition, most aid to developing countries is based on political quid-pro-quo. Developed country parliaments determine gross aid amounts on a per-country basis based entirely on political objectives, and it is up to the country's aid agency to divide up the budget more or less in proportion to the parliament's current priorities (such as climate change, gender, population, health). Then the aid agencies or multilateral banks go out and search for projects, usually by asking the unreformed governments. If there aren't any good projects, it doesn't stop the expenditure because donor agencies have to spend their budgets or they will not get budget allocations next year. So most donor agencies do the best they can under the circumstances. There is a lot more more money available than good ideas. In the case of the industrialized world, the same principle is at work: money doesn't alleviate poverty; policies alleviate poverty. Donors don't alleviate poverty; governments alleviate poverty.

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