1260 Economists advise against Aid for Africa

Aid doesn't solve corruption, or help trade or even reverse disease outbreaks. African James Shikwati say western industrial nations "have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor." [HT Florida Cracker]

Richard Posner seems to say it's not the African's responsibility to make you feel good and generous . . . "Foreign aid makes people in wealthy countries feel generous, but retards reform in those countries as well as in the donee countries. Obviously from a world welfare as well as African welfare standpoint Europe and the United States should not impose tariffs on agricultural imports in order to protect their rich farmers. Eliminating tariffs would do more for Africa than giving them an extra $25 billion a year to squander. (It would also increase the wealth of the countries that eliminated their tariffs.)

Since there are 650 million people in Sub-Saharan Africa, the extra $25 billion will increase per capita annual income (assuming it isn't squirreled away by corrupt elites) by only $40. Not that such an increase is wholly trivial in relative terms: Nigeria, for example, has an annual per capita income of only about $300, and it is not the poorest country in Africa. But it is unlikely that the poorest people in these countries will benefit from the extra money; even if most of it isn't skimmed off by corrupt officials or squandered on dumb projects, it is likely to stave off fundamental political and economic reforms. (The G8 nations at Gleneagles also agreed to forgive some $50 in African debts to them, but that is a one-time event and its annualized value is therefore much less than $25 billion a year.)" Becker-Posner Blog

International Monetary Fund disconnects of the concert: "Two International Monetary Fund researchers have turned intellectual firehoses on crowds at the Live 8 concerts, publishing research concluding that, in most cases, aid does nothing to boost economic growth.

In two research papers the fund's research director, Raghuram Rajan, and research economist Arvin Subramanian say comparisons of growth rates throughout the developing world show no solid evidence that aid flows lift growth."