The Shady Economics of International Aid

Taxpayers in wealthy nations fund a $200 billion international aid and development industry. They believe that these generous contributions are being used wisely to help developing nations strengthen their economies and lift their people out of poverty. International aid agencies present themselves as torchbearers for a better world. However, as Dr. Saeed Ahmed argues, the reality is starkly different. Basing his arguments on robust economic data from around the world, and on his high-level work at Pakistan's central bank and the International Monetary Fund, Dr. Ahmed exposes serious problems in the international aid system. Dr. Ahmed shows that the donor agencies' programs rarely bring about meaningful or long-lasting changes; rather, many programs are designed to gain leverage over recipient countries' governments. The imposition of these organizations' self-serving agendas, he says, merely restricts the freedoms of people in recipient nations, due in part to massive debt burdens. The weight of debt often forces developing countries to raise taxes, which can cause civic strife and violent protests. The author argues that the international aid system, because it lacks proper accountability measures or success metrics, facilitates endemic corruption, and rampant misallocation and misutilization of money, within recipient nations. Thus, says Dr. Ahmed, international aid usually leaves developing nations in worse condition. As the economic data shows, many developing countries have deteriorated in terms of tax collection, poverty rates, government effectiveness, human development, and access to justice. Dr. Ahmed calls on taxpayers, policymakers, lawmakers, and leaders of aid organizations to implement major reforms. The Shady Economics of International Aid is a must-read book for anyone who cares about the future of billions of people in developing nations.