International Aid and Private Schools for the Poor

International Aid and Private Schools for the Poor

Smiles, Miracles and Markets

New Thinking in Political Economy series

Pauline Dixon

This fascinating volume challenges the widely held belief that the state should supply, finance and regulate schooling in developing countries. Using India as an example, Dr. Pauline Dixon examines the ways in which private, for-profit schools might serve as a successful alternative to state-run systems of education in impoverished communities around the world.

Chapter 2: Hostages to a fortune? – Schooling and international aid

Pauline Dixon

Subjects: development studies, development economics, economics and finance, political economy, education, economics of education


The giving of aid is a relatively recent phenomenon. Stimulated by the success of the Marshall Plan in 1948, when the USA provided around $13 billion for the reconstruction of Europe after World War II, it was argued by economists such as John Maynard Keynes that similar outcomes could be achieved in developing countries. The Marshall Plan became ‘the model for future foreign aid programmes’. The USA kick-started economic recovery in Europe. It was claimed therefore that this demonstrated the possibility of developed countries stimulating growth in poor ones by providing them with aid. Economic, moral and political validations are typically presented to justify the giving of aid. In economic terms providing poor countries with financial aid, the hypothesis goes, will stimulate investment, thus encouraging economic growth. Poverty traps can be broken by investments which generate greater productivity and growth; hence the eventual eradication of poverty. Thus foreign aid will promote growth and development by filling a financing gap that exists in poor developing countries. Poverty traps cause illiteracy, poor health, low savings, population growth and poor infrastructure.

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