I agree, though it seems a distinction needs to be drawn between aid that's providing goods and services that could be produced locally, vs aid that's providing medical goods and services that couldn't emerge from the local economy fast enough to help those being helped (such as perhaps the Gates Foundation does).
That doesn't solve a major problem: Who is to say what these people need? Give them the money, and they decide for themselves.
UCT fits free market theory, including market flexibility (if needs change or the first idea fails, consumers can change their spending much more quickly than donors can change their programs), and promotes democracy and empowering individuals. It also avoids common problems such as donors' bad decisions and their unanticipated consequences, corruption among those controlling distribution of the goods, and perversion of local markets.
As one example, according to a report in Foreign Affairs, the West's focus on AIDS, malaria, and TB, and their relatively enormous market power, took local medical resources away from more standard health care needs such as child birth, and might have resulted in more sickness and deaths than it prevented (IIRC the details of the article from several years go).
I came here to say just that. Aid is good, but it should be either (1) very temporary acute relief goods (food, water, shelters, sanitation, clothing) (2) very high technology services, such as MSF (Doctors without Borders) provides, or (3) capital assets for the population at large, in the form of business microloans and direct cash grants.
In brief, unless the nation is in crisis, send fishing poles, not fish.
