The worldwide trend toward economic reform in the 1990s means that there are a large number of countries in which financial assistance has a great impact on poverty reduction. It is ironic and tragic that the volume of aid is declining while the environment for effective aid is improving. On the other hand, it remains true that donors could do a better job allocating aid, focusing a larger amount on poor countries with sound policies.
Foreign aid is also about ideas or knowledge creation. Well-designed assistance can help countries find the policies that they need, and help communities improve important public services that make for a better life today and contribute to long-term development.
