I am a big admirer of Nick Kristof, of the passion and concern that animate his books and columns, and of the must-do-can-do spirit that they embody. But sometimes his soft heart gets ahead of the hard head, leading to misleading and intellectually insupportable advocacy of foreign aid. A good example is today’s column.
Kristof’s main thrust in today’s column is that randomized control trials (RCTs) are increasingly providing a good and effective way of making aid work. The old debate about whether aid is effective or not is sterile because we now have an intellectual apparatus for making better calls about how to target aid.
The RCT approach to development pioneered and propagated by Professors Abhijit Banerjee, Esther Duflo and Michael Kremer is indeed a very positive and significant development. But the key point is that this approach sheds light, under a limited set of circumstances, on whether certain policy interventions work. They do not—I repeat, do not—shed any light on whether aid per se works. The distinction is important, not intellectual nitpicking.
If de-worming is shown to work as an intervention, it can be implemented and financed domestically by governments, it can be done via foreign assistance, or some combination of the two. There are good reasons to believe that policy interventions implemented domestically are probably more desirable because of the benefits of country ownership and accountability. But there is absolutely no evidence to show aid-financed interventions are better or even effective. In short, RCTs might in principle provide a relatively narrow list of interventions that donors can choose to support, but they do not prove that the support itself is beneficial.
There is a larger sense in which Kristof’s invocation of RCTs to advocate aid could be misleading or mis-interpreted. Even if RCT-proven interventions provide some targets towards which modest amounts of foreign assistance could be directed, they shed no light at all about the aggregate effects of larger scale foreign assistance.
Consider the most pressing current case. What would be the effects of disbursing $1-1.5 billion of foreign aid to Pakistan? RCTs do not, and cannot, have anything to say on the matter—not only because of their narrow focus and applicability, and hence non-generalizability, but also because they cannot speak to macroeconomic effects. The larger developmental effects of aid may be good or bad but RCTs cannot help us distinguish them. We are still left to rely on other evidence—economic and historic—about the effects of aid in stunting institutional development, in creating aid-dependence, in entrenching the hold of the bad guys, and in making the export sector uncompetitive in a way that is detrimental to long run development. These broader effects remain stubbornly present and need to be addressed head on before any large-scale foreign assistance is contemplated.