"I never said that."
Posted on 07/18/2007 2:54:40 PM PDT by libertarianPA
WASHINGTON (Reuters) - Aid to poor countries has little effect on economic growth, and policies that rely on such claims should be reexamined, two former International Monetary Fund economists wrote in a paper released this month.
"We find little evidence of a robust positive correlation between aid and growth," wrote Raghuram Rajan, who stepped down as IMF chief economist at the end of 2006, and Arvind Subramanian, who left the IMF this year, said.
"We find little evidence that aid works better in better policy or institutional environments, or that certain kinds of aid work better than others," they added.
Rajan is now teaching at the University of Chicago, while Subramanian joined the Washington-based Peterson Institute for International Economics.
"Our findings suggest that for aid to be effective in the future, the aid apparatus will have to be rethought."
The paper comes as rich nations struggle to meet global poverty-reduction targets set out in 2000 as part of the United Nations Millennium Development Goals.
The economists sought to adjust for unusual situations that could skew the data, like times when donations rise following a hurricane or earthquake, which can stunt economic growth. They found similar results regardless of the type of aid.
"One of the most enduring and important questions in economics is whether foreign aid helps countries grow," they wrote.
"There is a moral imperative to this question: it is a travesty for so many countries to remain poor if a relatively small transfer of resources from rich countries could set them on the path to growth."
But if there is no clear evidence that aid boosts growth, then handing out more money makes little sense, they said.
In a telephone interview, Subramanian said the aid money would be better spent on a research and development fund to get the private sector to make products to help poor countries.
Private companies have little financial incentive to develop a malaria vaccine, for example, but if rich nations pledged to buy the product for impoverished countries, firms would be more inclined to invest in the research.
"The challenge is, how do you harness this good intention and good motives into better results?" Subramanian said.
Well no kidding.
We typically don’t give aid to help the poor. We give aid to help outselves. Now that the west seems to be abandoning Africa, China is only too happy to move in.
“Economists see aid to poor nations as ineffective”
Well no kidding??
"I never said that."
Unbelievable. This has been obvious for what, 50 years?
And now the “experts” are discovering it to be true.
Unbelievable.
No kidding. Taxpayers whose money gets sent to places like Africa have known this for decades. Finally, the economists figured it out. What do you think clued them in?
True, but that's not going to stop them from trumping foreign aid, especially to Africa. Facts just do mean a thing to these people.
Removing the corrupt leftist kleptocracy governments and replacing them with basically “colonial” governments administered by the advanced countries with a “good government” mandate to ensure the rule of law fairly and equally applied would be the single most effective thing to lift these countries out of their misery. Maybe the Brits could crank up their “Colonial Office” again. Zim should be first on the list.
News flash for the headline writer: it ain’t just economists seeing it that way.
Following the break out of colonialism, many of the countries in Africa could have either gone with the Soviets or the West. They were pretty much up for ideological grabs and the U.S. grabbed.
Aid isn’t provided to stimulate growth; it’s provided to soothe the consciences of liberals who feel that wealth is eeeeeevil and mysteriously distributed to the people of the earth in an unjust way.
Aid isn’t provided to stimulate growth; it’s provided to soothe the consciences of liberals who feel that wealth is eeeeeevil and mysteriously distributed to the people of the earth in an unjust way.
Uh no, it’s provided to establish a strategic foot hold in a region.
Its effective in making them dependent on the aid. Also has the tendency make otherwise not-poor nations, become listed on the poor nation agenda.
How’a that working for us?
Ineffective? Let’s be more blunt...Aid in the form of food and the in the name of compassion is stupid. Giving free food to a country eviscerates local farmers and merchants. Then we wonder why there is hunger year after year after year.
Want something that works? Hint! Try capitalism.
Well, most of Africa didn’t go to the Soviets during the Cold War. We still have a strategic foothold in the region, which means access to natural resources.
Missionary work plays a big role, too. I would think it’s even bigger than changes to the secular political systems.
Calvin Coolege said something to this effect. An economist is someone who looks at reality and tries to find a theory to fit.
Are they starting with the "one child" policy? Seems like that would go a long way towards reducing misery in Africa.
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