Mainstream development economics, in a nutshell, holds that the poverty is an institutional problem.

This is quite right - the best case for development aid in poor countries is through its positive feedback on institutions (most plausibly, civil society). Then again, most proponents of effective giving favor interventions that would plausibly have such feedbacks - for instance, it turns out that a lot of the money GiveDirectly hands out to poor folks is spent on entrepreneurship and capital acquisition, not direct consumption.