terça-feira, fevereiro 15, 2005
Poor Countries Need Homegrown Market-Based Reforms, Not Foreign Aid
The United Nations' recent call to cut world poverty by 50 percent -- by having richer countries give twice as much aid to poorer countries -- is unlikely to promote economic progress and may actually impede, according to Benjamin Powell, director of the Independent Institute's Center on Entrepreneurial Innovation.
The best way to lift the world's poor masses out of poverty is for their economies to grow and develop. But aid has a horrible track record of promoting development, writes Powell in a recent op-ed. Numerous economic studies find that increased aid has not fostered better economic performance. African countries now have over 50 years of official development aid with little to show for it. Because aid does nothing to improve economic performance, doubling aid will only double the money wasted on an ineffective program.
If the U.N. wants to promote economic development, it should promote economic freedom, not foreign aid, according to Powell.
Aid may actually decrease economic freedom in recipient countries because the assistance is often given to governments, increasing their size and power relative to the private sector, writes Powell. Since governments often reward their political supporters, aid can also delay reform by keeping corrupt governments and their bad policies in power. Aid can also teach impoverished citizens and would-be entrepreneurs that the way to get ahead is to seek government handouts rather than expanding consumer markets.
The U.N. report did contain one pro-market recommendation: the easing of trade barriers. Encouraging third world countries to lower trade barriers and reducing our own barriers would help impoverished countries raise incomes, employment, and living conditions by expanding the industries to which they are best suited. Getting poor countries to reform is the challenge.
posted by Miguel Noronha 8:59 da manhã
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