Phyllis Pomerantz, Edmund Malesky discuss the future of foreign aid

“You can’t just do business as usual.”

Foreign aid and foreign assistance should evolve as the international context changes, remarked Phyllis Pomerantz, professor emerita of the practice, during an event hosted by the Duke Center for International Development.

At “Foreign Aid: Does it have a future?,” a fireside chat with Edmund Malesky, director of the Duke Center for International Development and professor of political economy, Pomerantz cited crises such as climate change and the pandemic, as well as a shift towards a multipolar world with multiple nations becoming centers of power and influence, as reasons to reexamine aid. “The question is, ‘What happens to foreign aid and foreign assistance as you go through these big shifts?’” she asked the audience.

Before joining Duke University as a faculty member in the Master of International Development Policy program, Pomerantz had a long career at the World Bank, including managerial appointments in agriculture, rural development and infrastructure, and as a country director and the World Bank’s first chief learning officer. She authored the book “Foreign Aid: Policy and Practice,” published in July 2023 by Routledge, which provides a comprehensive summary of the background, actors, core principles, policies and outcomes of foreign aid, followed by an examination of the key controversies and trends in aid today.

Throughout her 16 years teaching, including a semester course on foreign aid, Pomerantz had not found a book that effectively covered the basics of foreign aid and then built on those basics. She wanted to fill this gap by writing a book to help students, as well as practitioners, “understand what some of the more complex conversations, issues and thoughts are about foreign aid.”

The Role of the Private Sector

When asked how foreign aid has changed over time, Pomerantz responded that not much has changed since she began working in this space in the late 1970s. “This is an industry that is painfully slow to change,” she said. However, she said topics such as good governance, corruption and the environment have entered the aid conversation more prominently in the last 25 years.

She also noted the popularity of the private sector’s involvement in development work has ebbed and flowed over the years, with it currently being favored. “The role of the private sector today is being emphasized, and the new president of the World Bank, Ajay Banga, basically says what we have to do is leverage the private sector for development.”

“Middle-income countries and upper-middle-income countries don't need foreign aid as much,” Pomerantz said. Aid makes up at most 20% of external financing for upper-middle income countries (excluding those in conflict or with refugees), whereas aid is around 95% of external financing for the lowest-income countries.

For aid to truly leverage the private sector, the private sector must go to the countries with the largest need for aid, Pomerantz explained. However, poverty and conflict in these countries present challenges, leading to difficulties for both public and private sector development.

“It is not going to be that simple as to say, ‘Well, we're in the age of the private sector again and they're going to save us,’” she said. “That is why I think that foreign aid is here to stay; for better or worse, there's a certain amount of stability in the foreign aid regime.”

Evaluating Success

Malesky and Pomerantz discussed evaluating the effectiveness of foreign aid, the difficulties with coordination between donors and recipients, and how Pomerantz envisions successful development.

“If you don't have local leadership and ownership [by the recipient], there's no way your aid is going to be successful,” Pomerantz said. “I believe intensely in ownership. If you're going to be of assistance, you've got to let people do what they want to do, what they need to do and what they know how to do. There has to be much more flexibility. You can’t earmark all funds.”

She clarified her view does not mean that donors will give recipients free reign with development funds, explaining “we're still in a situation where things are very tightly controlled and earmarked; donors have constituencies back home to answer to.”

Pomerantz would like to see the evaluation of aid programs focus more on learning and doing better rather than on accounting, control of funds and counting physical outputs.

About DCID

The Duke Center for International Development (DCID), a unit within Duke University’s Sanford School of Public Policy, focuses on promoting sustainable development through its research, education and engagement with students, policy makers, practitioners, development partners, civil society and the private sector.