Aid vs development

Lant Pritchett comes out strongly in favour of aid agencies that promote economic development on Aid Watch:

There are many ways of providing assistance to people in poor countries that do little or nothing to produce development. While we might all whole-heartedly agree that de-worming is demonstrated to be cost-effective assistance, its impact on development is, at best, tiny.
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[A]ddressing a series of important problems for well-being like vaccinations, schools for girls, HIV/AIDS prevention or malaria does not add up to a development agenda.
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Development, as accelerated modernization… is the only demonstrated and sustained way to achieve the objectives of increased well-being.

This is particularly relevant in NZ now that Murray McCully wants to make NZAID promote development, rather than poverty elimination. Are his opponents just concerned about political manipulation of aid money, or do they really think that development is the wrong goal for an aid agency?

I think what’s often ignored here is that we face a trade-off between current and future generations. Poverty alleviation is not necessarily the best way to promote development, and development is likely the better way to help out future generations. Do the opposing sides disagree about the best way to help each group, or is there primary difference a value judgment about the relative importance of different generations?