Monday, July 11, 2005

How Not to Help Africa

In a July 7th op-ed for the Los Angeles Times, Max Boot makes the excellent point that Africa's problems are not due to a lack of development aid:

In the last 50 years, $2.3 trillion has been spent to help poor countries. Yet Africans' income and life expectancy have gone down, not up, during that period, while South Korea, Singapore and other Asian nations that received little if any assistance have moved from African-level poverty to European-level prosperity thanks to their superior economic policies.

Economists who have studied aid projects have found numerous reasons for the failures. In many instances, money was siphoned off by corrupt officials. Even when funds did reach the intended beneficiaries, the money often distorted local markets for goods and labor, creating inflation that drove local businesses out of business.

Only one major research paper in recent years has found any positive correlation between foreign aid and economic growth, and that only in countries "with good fiscal, monetary and trade policies," which excludes much of Africa. Most experts think even that conclusion is too optimistic.

As I've argued earlier, political reform is the key to solving Africa's afflictions. As long as the Mugabes and other corrupt thugs remain in power, no amount of money will end that continent's suffering.


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