Esther Duflo has an interesting take on the appropriateness of aid that may fall into corrupt hands on the Managing Globalization blog:
But how much money leaks is not the relevant measure of whether a program should be undertaken. What is relevant is how useful each dollar [of] aid is. Usefulness is the combination of how much money actually reaches its intended beneficiary, and how useful the program is for the beneficiary. So if an intervention is extremely beneficial (which it may be for populations that have absolutely nothing), it may still be worthwhile undertaking it in a very corrupt and poor country even if we think that some of it will be lost along the way. This was my rationale for deciding, for example, to donate money to Myanmar after the floods of last spring, despite the real risk of misappropriation. Of course, this has to be balanced against the risk of inadvertently helping to keep someone in power because the leakage provides funds that help him maintain his base or pay for his army.
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