Economic Powerhouses

Bono is correct.  But I’d go a little bit further:  aid has the effect of worsening conditions for Africans.  Skip the portion which goes to corruption—from, as Lord Bauer famously put it, the poor in rich countries to the rich in poor countries—and look at the “good” aid.  Most of this comes in the form of food and textiles.  These also happen to be among the easiest industries for poor individuals to enter into, meaning that food and textile aid directly compete with important industries in these countries.  The end result is that a lot of the marginal employers (the rural farmers and seamstresses) lose their business.  In contrast, inframarginal firms—especially those tightly bound to the local government or a multi-national chain—can still survive (and possibly thrive, with the reduced competition), but those tend to be the better-off employers and employees, not the ones whom aid-givers are actually trying to help.


3 thoughts on “Economic Powerhouses

  1. Yes, those industries are comparatively easy to enter into — for somebody with sufficient education and capital. I would be willing to bet (although I can’t prove it, obviously) that most Africans lack the necessary schooling to do this. If nobody is getting fed, competition is the least of their concerns.

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