The Economics of International Development

Hopes for development aid remain high among Western politicians and pundits, but the evidence is depressing. Foreign aid has on average probably no effect on long-run growth. To understand the failure of many development projects, we need a deeper consideration of the failure of top-down planning in general. Without the mechanisms of free markets and entrepreneurial actions to guide them, development agencies and governments are consistently unable to determine which projects will be successful and which will fail. We should not be hypocritically criticising dictators in Africa without looking at our own role in the US and the UK in supporting dictators to promote our own foreign policy interests while ignoring the rights of poor Africans that are being violated. The problem of poverty is not a shortage of experts: it is a shortage of rights. When there is an environment of universal rights for poor people, then technical solutions can happen. In the absence of those rights, there will be no incentive to bring about technical solutions on a permanent basis.