Santi Ruiz, a colleague at the Institute for Progress (IFP) and host of the "Statecraft" interview series, has released a comprehensive interview with Dean Karlan, the former Chief Economist at the U.S. Agency for International Development (USAID). The discussion centers on Karlan's efforts to integrate evidence-based approaches into foreign aid and the significant shift of $1.7 billion towards programs with stronger evidence of effectiveness during his tenure. The interview provides an in-depth look into the process of reforming foreign aid within a large governmental agency.
Dean Karlan, a distinguished professor of Economics and Finance at Northwestern University and founder of Innovations for Poverty Action (IPA), served as USAID's first-ever Chief Economist from 2022 until his resignation in February 2025. His appointment was widely seen as a pivotal move to champion data-driven decision-making and enhance the impact of the agency's substantial budget. Karlan's role involved leveraging insights from randomized controlled trials and other empirical assessments to guide USAID's investment strategies.
During his two-and-a-half-year tenure, Karlan's office successfully reallocated $1.7 billion of USAID's spending. This substantial sum was directed towards initiatives that demonstrated proven results, aiming to maximize the efficiency and effectiveness of foreign aid. This strategic shift underscores a growing emphasis within development circles on accountability and measurable outcomes in global poverty alleviation efforts.
The interview, part of Ruiz's Statecraft series which examines how policy is made, delves into the practicalities and challenges of implementing such reforms within a complex bureaucratic structure. Karlan's departure from USAID earlier this year, which he described as a simple contract cancellation, came after significant efforts to embed evidence-based practices more deeply within the agency. His insights offer valuable lessons for those interested in leveraging public institutions for impactful projects.
Karlan continues to advocate for rigorous, evidence-informed approaches in development economics, emphasizing the importance of understanding what truly works to combat global poverty. His work highlights the ongoing evolution of foreign aid, moving towards a more analytical and results-oriented framework to ensure resources are utilized effectively for sustainable development.