About to send a donation? Think twice.

The handout approach to development assistance is back in fashion.

The rationale behind the handout approach seems straightforward enough: the most efficient way to help people living in poverty must be to give them money. That is why the earliest large-scale international development assistance efforts, in the 1950s and 1960s, were largely handout-based.

The results, though, were mostly awful: the international development handouts led to massive waste and corruption – and they imbued relations between wealthy countries and poor ones with a paternalistic, dependency-ridden flavor from which we have yet to recover.

That is one reason “capacity building” approaches, which aim to help people in developing countries via training and education, became popular. These had the advantage of not creating dependency on monetary handouts. Unfortunately, they didn’t do much else either.Research showed that simple cash transfers to low-income individuals generate more benefit than spending the same amounts on providing them with business training.

In my experience, giving handouts to impoverished households creates a perverse incentive… [Read the full article at the Huffington Post]


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