Friday, June 10, 2005

Foreign Aid

Foreign Aid does more harm than good:

* Very often, aid is spent on projects that benefit political leaders at the expense of the citizens.
* Almost always, the money crowds out investment by the private sector and -- because government is not good at making investment decisions -- it undermines economic development.
* Often it has bolstered corrupt regimes that would otherwise have been thrown out

The article also concludes that trade liberalization would be a better alternative:

Other reforms, such as removing trade barriers and eliminating trade-distorting agricultural subsidies, would yield far more benefits than increasing aid...