2009-04-05

Another African economist calls to stop "aid"

Eliezer summarizes it well:
Dambisa Moyo, an African economist, has joined her voice to the other African economists [e.g. James Shikwati] calling for a full halt to Western aid. Her book is called Dead Aid and it asserts a direct cause-and-effect relationship between $1 trillion of aid and the rise in African poverty rates from 11% to 66%.

[...]

Moyo says she's gotten a better reception in Africa than in the West. Maybe you need to see your whole continent wrecked by emotion and pity before "logic and evidence" start to sound appealing.
Foreign aid is interfering with African economies. It is preventing the creation of an internal order based on domestic production, and is replacing it with an external order based on aid redirection. This leads to well-being for the few who are able to hijack the aid for themselves and people around them, while causing suffering for everyone else whose productive potential is undermined by the power wielded by those who hijack aid, as well as by the aid itself (no one can compete with freebies).

In general, poverty arises where people compete over a rich resource instead of having to create value from scratch.

When resources have to be created, those who would wield power cannot tap into them unless they engage the productive potential of the people, which leads the community to prosperity.

But when resources exist for the taking, whether in the form of natural resources or foreign aid, a few people will hijack those resources and thus gain power, which they will use to exclude others from the same resources. Thus are created leaders who see no gain in engaging people's productive potential, which remains untapped, and the community remains poor, or may become poor even if it wasn't.

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