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Planners versus Searchers in Foreign Aid

William Easterly ()

Asian Development Review, 2006, vol. 23-2, issue 2, 1-35

Abstract: Only for the recipients of foreign aid is something akin to central planning seen as a way to achieve prosperity. The end of poverty is achieved with free markets and democracy—where decentralized “searchers” look for ways to meet individual needs—not Poverty Reduction Strategy Papers (PRSPs) to achieve Millennium Development Goals (MDGs). The PRSPs and MDGs create lots of bureaucracy but hold no one specific agency in foreign aid accountable for any one specific task. Planners in foreign aid use the old failed models of the past—the “Financing Gap”, the “poverty trap”, the government-to-government aid model; and the “expenditures = outcomes” mentality. Searchers in foreign aid would imitate the feedback and accountability of markets and democracy to provide goods and services to individuals until homegrown markets and democracy end poverty in the society as a whole. An example of the more promising “searchers” approach in foreign aid is 2006 Nobel Peace Laureate Mohammad Yunus and Grameen Bank.

Date: 2006
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