On Day 3, June 6, we will be talking about developing countries. One of the central issues is whether international aid does good or harm. Are we to believe those who seek a significant increase in international development aid (see for example the Jeffery Sachs reference and the UN Millenium Development Goals http://www.un.org/millenniumgoals/ ) and forgive current debts or do we believe those who say we should end development aid and use “market” solutions only to foster development?
The following report just landed on my desk from the Cato Institute, a think tank that advocates for free market solutions.
The False Promise of Gleneagles
http://www.cato.org/pubs/dpa/dpa9.pdf
Not surprisingly the report explains why aid doesn’t work and why free trade will (see below for opening paragraph). Do you agree?
John C
....
OPENING PARAGRAPH OF The False Promise of Gleneagles
In response to persisting poverty in Africa, representatives
from the world’s eight leading industrialized
nations—Germany, Canada, the United States, France,
Italy, Japan, the United Kingdom, and Russia—met in Gleneagles,
Scotland, in 2005 and agreed on a three-pronged
approach to help Africa. They would increase foreign aid to
the continent, reduce Africa’s debt, and open their markets
to African exports. Unfortunately, aid has harmed rather
than helped Africa. It has failed to stimulate growth or
reform, and encouraged waste and corruption. For example,
aid has financed 40 percent of military spending in
Africa. Similarly, debt relief has failed to prevent African
countries from falling into debt again.
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Ca depend, as the French would say. The issue is much too complex to render into a one-size-fits-all conclusion, though the Cato Institute would like us to think that. Africa is a massive place, one that the defies most solutions grafted on by the West. Surely the need is equally massive, but we have not moved beyond a myopic view of how to fix it. The debate can not be an either/or solution, i.e., aid or no aid. It's true that past solutions have not worked. More money = more problems unless the country in question has the capacity to manage it and needed technical assistance is also provided. Would Somalia have pirates with a stable infrastructure and other means of income available? One success is the Seychelles whose economy is fueled by French tourists.
ReplyDeleteMaryann
The problems associated with the African continent are many and I don’t pretend to have an answer or even fully understand the scope of the problems. But I am disinclined to agree with a CATO assessment (I know, you’re all shocked…) that free markets will solve the problems of Africa whereas aid will only exacerbate them. Last time we met, John H. referenced Jared Diamond’s excellent book Guns, Germs and Steel, which attributes Eurasian advances to environmental advantages over other parts of the world. It seems plausible to me that trying to impose systems that work in the rest of the world may not fit on the African continent for cultural as well as environmental reasons that Diamond pointed out.
ReplyDeleteI understand the argument that if a lot of aid goes to Africa, but it gets misspent on military expenses and lining the pockets of a few people, how can more aid be a good idea? But how will the free market fix the problems? What free market? Free markets depend on stable business and judicial systems in which to operate. You can’t have a functioning free market without those elements. They are the contributing factors to a capitalist society -- part of our collective inheritance -- that many people like to ignore or dismiss. But without them, business cannot function. So I don’t think it is as simple as lifting tariffs and stopping aid to change the fate of the African continent. How can a war torn nation like Sudan suddenly turn prosperous because tariffs are lifted? And this also imagines that there is pent up production just waiting to happen in these countries. I don’t think that is the case either.
The CATO piece compares advances by China and India as evidence that Africa is falling further behind because they haven’t been able to make the same advances. This ignores the fact that China and India are sovereign nations and Africa is a continent with I believe over 50 separate countries. Isn’t that like comparing apples to oranges?
Carol Starmack