Cash transfers: The index fund of international development

[This] illustrates another upside to cash transfers: they can serve as the index funds of international development. An index fund is a bundle of investments that is not actively managed, reducing the costs for investors. Its value simply reflects the upward and downward swings of the individual stocks that are included in the bundle. Similarly, a cash transfer is a development project stripped of any active management costs, and its performance tracks the success or failure of the individual recipient. Cash transfers thus provide a baseline for evaluating the active management performance of government officials and development professionals.

Move over Vanguard.

My article with Paul Niehaus, in the latest edition of Foreign Affairs (ungated if you register for free)

49 Responses

  1. Yes, cash will reduce the overheads of highly paid foreigners and nationals in poor countries. More money to the small holders for a start. It will also reduce the world of blogging considerably and free up cyberspace not to mention academia. But, it is another attempt to find the silver bullet which will fail until the fundamentals are fixed. There was a post on this site about a year ago on the same subject with a comment by a Nigerian. I call it the indigenous anthropology.

  2. I love the concept, but why limit it to international development? Wouldn’t our political arguments here in the States be more properly framed if we compared each intervention to an equivalent cash transfer?