Here is an interesting article by Abhijit Banerjee of MIT; here are many responses, most prominently by Angus Deaton (the most incisive), Nicholas Stern, and Jagdish Bhagwati.
How to make foreign aid work
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The best foreign (humanitarian) aid is to hire private military companies to create the rule of law and private property rights in the worst governed areas. This would also create a competition among the worst governments to reform so as to avoid being the next target for such aid.
The best foreign aid is to convince people and governments to believe in free market economics.
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