For some, foreign aid, is the only great hope for ending poverty in the very poor nations of our world, whilst for others, foreign aid is a key part of the problem — fueling wars, corruption and inefficient allocations of capital — making bad situations even worse. Whilst many researchers have attempted to look at the connection between foreign aid and development, getting good data on economic matters in the very poor, poorly governed and sometimes secretive nations can stymy even the most diligent research efforts. If you consider that some estimates of corruption in Africa alone run close to $150 billion (1), and that some heads of African states are listed as multi-billionaires even whilst their nations remain terribly impoverished (2), it is no wonder that getting transparent access to what is really happening with the foreign aid money can be a challenge.
Despite this, there are some types of data that are almost impossible for a country to distort or hide. Recently, several ingenious Economists have begun to use these data to shed light (literally) on the foreign-aid — development nexus. One such researcher is Dr Paul Raschky, Lecturer in the Department of Economics at Monash University, Melbourne. With co-author Roland Hodler (University of Melbourne), Dr Raschky has been using nighttime light data to ask deep questions about whether foreign aid finds its way disproportionately to regions where political leaders have their support. Their findings are both troubling and fascinating. I began by asking Dr Raschky what the key research questions were that drove the work.
- African Union report (2002) URL: http://www.u4.no/helpdesk/helpdesk/queries/queryattach/q44Addisreport.pdf
- Lawal, G. (2007). Corruption and Development in Africa: Challenges for Political and Economic Change. Humanity & Social Sciences Journal 2 (1): 01-07.
- The paper this interview is based on: Roland Hodler and Paul A. Raschky, “Foreign Aid and Enlightened Leaders”, Dept. of Economics Discussion Paper Series 54-10, Monash University, Melbourne, Australia. (.pdf)
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Image source: https://hbr.org/2016/08/entrepreneurship-needs-to-be-a-bigger-part-of-us-foreign-aid