Of course, we\’d like to know whether official aid helps. And whether it crowds out private sector investment. So we get these numbers from The Guardian:
On average, in these countries aid flows increased threefold between 2000 and 2010, but there was no sign that official assistance crowded out private investment. Far from it, foreign direct investment increased fourfold over the same period. Growth averaged 5.5% between 2000 and 2011, an impressive performance given the meltdown in the global economy that followed the financial crisis of 2007.
Glory Be! Private sector aid follows public! Quick, right that cheque on the taxpayers\’ account!
Err, hang on a bit.
Africa is in the midst of an economic boom. Foreign Direct Investment [FDI] in Sub-Saharan Africa grew from US$9bn in 2000 to over $62bn in 2008, with Ernest & Young capital investment forecast of $150bn by 2015.
You mean that those countries that got that lovely aid got less private investment than those that did not?
This is evidence that there is no crowding out how exactly?
BTW, the general growth rate in sub-Saharan Africa over this period was 5.4%.
We\’ve not got any great evidence in favour of official foreign aid here, have we?