Marian Tupy at the CATO Institute has an amazing analysis of the impact of Western aid to Africa:
[B]etween 1960 and 2005, foreign aid worth more than $450 billion, inflation adjusted, poured into Africa. Result? Between 1975 and 2000, African gross domestic product (GDP) per capita declined at an average annual 0.59 percent rate. Over the same period, African GDP per capita fell from $1,770 in constant 1995 dollars adjusted for purchasing power parity (PPP) to $1,479.
In contrast, South Asia performed much better. Between 1975 and 2000, South Asian GDP per capita grew at an average annual 2.94 percent. South Asian GDP per capita grew from $1,010 in constant 1995 dollars adjusted for PPP to $2,056. Yet, between 1975 and 2000, the per capita foreign aid South Asians received was 21 percent that received by Africa. The link between foreign aid and economic development seems quite tenuous.
The solution? Better governance and open elections, not more international aid propping up failing regimes. Tupy offers the reason why:
The truth is there are no quick fixes to African poverty. Like so many times in the past, the grand utopian visions of well-meaning Westerners are likely to crash on the hard rocks of African reality. In the end, Africans will get it right and prosper, but they will not succeed by seeing foreign aid as a panacea or hoping someone else will solve their problems for them.
Indeed, and one of the major problems facing any government approach to social problems. More often than not, we only end up subsidizing the status quo, a condition which, in the case of the African continent, morally cannot continue.