More Aid, Less Growth

Aid kills growth, that's the message of a report by the Globalization Institute.

For every 1% increase in aid received by a developing country, there is a 3.65% drop in real GDP growth per person. Contrary to the conventional wisdom in the aid industry, the study finds that even where recipients have good governance, the effect is also negative.

The effect is negative because aid kills off fledgling businesses every time it undercuts what they themselves supply. It's negative because the aid gets funnelled through existing governments, cementing in the existing corrupt power structures that have made the African mess happen. I wonder if the Live-8 and 'Make Poverty History' enthusiasts have read the conclusions.

Enacting real free trade, ending subsidies to their own farmers, and bringing down the US and European tariff wall is something that western politicians could do to help Africans help themselves out of poverty. More sweatshops, real property rights and the rule of law, and an end to out-and-out corruption is something African politicians can do to help their own people. Good luck getting them to care. Try telling Robert Mugabe that his people's liberty and property matter.

[Hat tip Samizdata.net]