I'm less and less of a foreign aid skeptic

Owen Barder discusses a new paper, and concludes:

It is good to have confirmation that the folk regressions are wrong and that aid does, as best we can tell, lead to economic growth

Although it's an accounting illusion, we'd expect fiscal stimuli to increase measured GDP in the short run. Therefore it's self-defeating for market-oriented economists to deny this empirical association when it comes to foreign aid. The relationship between aid and economic growth must be similar - it'd take some pretty ridiculous multipliers not to see aid money increase growth.

I'm sure that the real wealth costs of aid are more to do with the unseen effects in the donor country  than any form of inefficiency in the aid recipient. In other words, there's clearly a Broken Window Fallacy at play, so it's quite possible to have an increase in growth in a recipient country and for aid to still be a destruction of real wealth. Just like the Olympic Games, I wouldn't deny that East London might well have an economic boost. The analogy is taking £1 each off 1,000,000 dispersed people, building a big shiny statue for £50,000, and marveling.

To be honest, as I age I am becoming more and more pro-aid. In the real world Owen's argument (I can't find a link) that even if only a fraction of aid money gets spent it still has an immense impact, is really quite powerful. I'm one of the few economists that can simultaneously praise corruption and chide rent-seeking in all its forms. The chief argument against state-aid is crowding out. But until there's a long line of effective private donors, foreign aid is one of the least objectionable activities a government can do. Yes in some cases it's counterproductive. Yes it can line the pockets of despots. Yes it encourages self-mutilation. But at the end of the day stick a couple of pennies in the jar and stop pontificating.

So just as I was about to cite a paper praising aid, I note that David Roodman sides with Bill Easterly over the findings. That doesn't make Owen wrong. It just means I'll need to read the paper and decide for myself...