In disaster relief there is increasing use of direct payments to victims. It turns out that the most useful thing you can give to e.g. famine victims in Somalia is small denomination dollars bills, either as grants in acute emergencies, or as cash for work.
This stimulates the local market and avoids the destructive effect of dumping large volumes of food aid on a country. Food aid programs feed the people (after the military has been fed) while destroying the livelihoods of local farmers and traders.
In conservation Paul Ferraro and others have made very good arguments for direct payments for conservation.
Now Martin Sandbu (via Natural Capital) proposes Natural Wealth Accounts, a system in which the income from natural resource exploitation is given directly to citizens. The income is then taxed by the government.
This addresses the Natural Resource Course (see this previous post). There is solid evidence that the Natural Resource Curse undermines a country’s governing institutions and increases corruption, waste, and mismanagement.
Sandbu’s proposal makes sense. But foreign aid, especially balance of payments support, works just like the curse. Why not go one step further and instead of having aid go to governments, just pay people directly, much like Alaska pays its residents?