Does Foreign Aid Make the Poor Poorer?

Abstract

The UK government has decided to increase rapidly its foreign aid budget to nearly £13 billion by 2015. This policy has been promoted by the Prime Minister as a moral obligation. Economists, as economists, may wish to hold fi re on the moral debate, but they can shed light on whether government aid actually helps development. And surely, if government aid makes poor people worse off, the moral justifi cation is fl imsy.