WASHINGTON, March 11: Foreign aid is increasingly a catalyst for change, making it possible for poor people to increase their incomes and to live longer, healthier and more productive lives, says a World Bank report released here on Monday.

Taking a position opposed to the US, which wants to cut down on aid and instead wants to concentrate on grants, the World Bank believes that aid is more effective today in reducing poverty than ever before.

The bank report, “The Role and Effectiveness of Development Assistance,” finds that despite some significant setbacks, overall progress has been remarkable and that aid has often helped to underpin success. “People in developing countries are much healthier and better educated today than they were 50 years ago. This study shows that development assistance has helped to make these changes possible.

It shows that the development community has learned from experience — from success and from failure,” says Nicholas Stern, World Bank Chief Economist and Senior Vice-President, Development Economics. “When we use what we have learned, aid works. The time is right for rich countries and developing countries to enter into a deep and lasting partnership to promote development and build a more inclusive world.”

The study has been released a week before the United Nations International Conference on Financing for Development begins in Monterrey, Mexico. The bank is urging donor countries to demonstrate their commitment to helping countries reach the “millennium development goals” set at a UN summit last year by giving greater access to their markets and by increasing development assistance.

The goals call for reducing by half the proportion of people living on less than a dollar a day between 1990 and 2015, and similar improvements in health, education, and other measures of well-being.

According to the bank, an additional $40 to $60 billion a year in aid will be needed to reach the goals, which means a doubling of current aid flows. Last week, World Bank President James Wolfensohn urged the rich countries to increase total aid by $10 billion a year for the next five years. Over the past decade, aid has declined about 20 per cent in inflation adjusted dollars.

Country case studies complied by the WB illustrate the variety of ways in which foreign assistance can help catalyze change through a combination of policy advice, technical assistance, and resource flows. In past decades, aid contributed to improved policies, governance and institutions in countries as diverse as Botswana, Chile and South Korea, opening the way for rapid growth and poverty reduction.

Countries that have benefited from aid more recently include China, Poland, Uganda, and Vietnam, all of which have sharply reduced poverty. Strong aid-supported progress is evident even where income growth is less rapid. In Bangladesh, development programmes supported by donors and non-governmental organizations have reduced infant mortality by half since 1970 and enabled women to have fewer children, bringing down the average number of births per woman from seven to 3.2.

In all of these countries, the bank says, although the achievements are due primarily to the efforts of the countries themselves, outside assistance played a significant role.

In a paper related to the report, the bank says developing countries’ economies have on average grown faster in per capita terms than those of OECD countries (1.9 per cent vs. 1.6 per cent).