The Guardian (London)

Virtue should be granted its reward; DEBATE/Instead of reducing foreign aid to an all-time low, donors should target it at developing world's well-governed countries, argues SECTION: The Guardian City Page; Pg. 21 FOREIGN aid is at an all-time low. More than 50 years after the "aid era" began with the Marshall Plan in 1947, development assistance has tumbled to less than a quarter of 1 per cent of major donors' GNP, the smallest share ever. Among the reasons for this drop, one stands out: the assumption that aid does not work very well. It is true that aid has been an unmitigated failure under some conditions, but it has been a spectacular success in others. A new World Bank report, Assessing Aid, aims to show how development assistance can be used more effectively, by understanding why aid works well in Bolivia or Uganda, for example, but has little or no impact in Nigeria or Zambia. Rather than starting with the question "does aid work?", Assessing Aid begins with "when does aid work best?" The answer is needed urgently. Despite great strides in poverty reduction in the past 50 years, more than a billion people still live in extreme poverty-on less than $ 1 a day. Even more lack basic services such as clean water, sanitation, electricity and schooling. This new focus on the circumstances under which aid works changes the nature of the debate. Rather than arguing for more aid or less assistance, Assessing Aid suggests that donors should concentrate on providing more effective aid. Defining effective development has become more complicated in recent years. At the same time that our aid budgets have diminished, our aspirations for aid have expanded. Fifty years ago, development focused on one objective: increasing gross domestic product. Today, we set broader goals. We seek to increase living standards, improve health and education, and maintain a healthy environment. We also want development to