Foreign aid, its defense and reform /

A thorough and candid response to economist Peter T. Bauer's challenge to assess the value of aid. Mosley presents a theoretical case for and against economic aid, followed by empirical tests of econometric models of the impact of aid on donor and recipient countries. The evaluation covers the impact of aid on development and growth, foreign trade, and distribution. Also, the political effects of aid are evaluated by looking at the resulting degree of dependence-independence of the recipient. In the political sphere, aid has been unsuccessful, and recipient countries have retained their independence. One must wonder, however, were those countries as independent as they would have been without aid? Aid seems to have had little effect on trade, except as a boon to lucky companies that were able to sell otherwise unsalable products. As an instrument of development, aid seems to have been neutral. Would this result hold, however, had the author distinguished between aid from socialist planned economies and capitalist market economies? Aid had positive though limited effects on distribution between countries, but little within countries. Mosley concludes by presenting a good defense of aid and proposes reforms to make it more effective: accumulation of better data, reduction of objectives and possibly scaling down expectations, emphasis on multilateral aid, and more flexibility in shifting aid where it can be most effective. This major contribution to the literature on economic aid is highly recommended for university and large public library collections.-E.H. Tuma, University of California, Davis