At the launch of “The Market for Aid” yesterday, authors Michael Klein and Tim Harford described how the market for development aid was changing – indeed, growing more competitive.  Will this increase in competition lead to more efficient aid agencies that will, in turn, make important reforms?

Not very likely.  The trouble with aid is that it’s difficult to ensure that it is properly dispersed.  Conditions attached to aid often do not create sustainable development within a country, and grants and loans given directly to governments often end up wasted in bureaucracy or corruption.  Creating a system of accountability and promoting the development of transparency within government is necessary if the current system is to continue – things that are far more easily said than done.  Even if “rating agencies” are created to rate projects and organizations distributing aid, as the authors suggest, the problems of accountability and excessive bureaucracy still exist.