Timmy elsewhere

At the ASI.

The Jubilee Debt Campaign is giving us this very strange argument showing that we shouldn’t be giving foreign aid.

5 thoughts on “Timmy elsewhere”

  1. I’m a big fan of the idea that developing countries can be helped to develop by Buying Their Stuff. Feeds mouths and gets a functioning economy going (rather than one based largely on applying for agency grants and government contracts).

    And Stuff means goods and services, but traditionally mostly goods. Seems to be easier for a country to “learn” how to export goods, and labour costs give an initial advantage. Then that gives an impetus that gets the rest of the economy going, until eventually they end up with a modern, services oriented economy.

    As I understand it, that is the basics of the traditional development model. What bugs me is whether that path is going to be available to those countries, mostly but not exclusively in Africa, which haven’t got started yet. It isn’t the more sophisticated bits of manufacturing, like aerospace, which is likely to move. But the more basic stuff obviously can – I understand a lot of textiles work is moving out of China due to increased wages there (a development success story) so that is quite mobile.

    Yet as manufacturing becomes a relatively smaller component of the global economy, and automation means it absorbs less of the labour force, does that make it less useful as an economic kickstarter? Do we need to focus more on outsourcing services to aid development, for example? I’d be interested where expert thinking is on this at the moment.

  2. There’s one strand that thinks we’re going to automate everything before everyone gets rich. That’s the gloomy view.

    A more realistic one is that development is simply more value added in an economy. As all incomes, by definition, equal all value added, it doesn’t really matter what is adding the value. And, say, the African countries don’t have to go the manufacturing route. Adding value in services is adding value all the same. It’s not even necessary for it to be adding value by exports. Adding value domestically works just as well. And the thing is, we’re seeing high (5% and over) growth in sub-Saharan Africa without really seeing export booms. It’s already happening to some extent…..

  3. Tim, I agree with you about trade barriers. But not that the only measure of the effectiveness of aid is the recipient government’s ability to repay it.

    For example, it might be the case that a particular project to reduce infant mortality costs more than simply leaving people to breed more infants to replace the ones who die. That doesn’t mean we shouldn’t do it, but it probably does mean that we should give the money for it rather than lending it.

  4. The idea that African countries are dependant on exporting to Europe or America is part of the problem.

    Africa is big enough, has education enough and has the people to bootstrap its own economic miracle. What holds it back is a lack of property rights, (an essential to capitalism), a climate of corruption, (imbued by a combination of tribalism and Marxism and fed by western paternalism), and an invasion of Islamic fundamentalists.

    The separate countries of the continent could trade amongst themselves quite happily and with a bit of investment from the west, (not aid, investment), great strides could be made.

    Indeed, things are already looking up despite all the negatives.

  5. Don’t blame the JDC for saying something it did not do – blame the Guardian for misreporting. As long as the effect of aid is to grow the economy faster so that (E-I-Capital Repayments) increases *whether or nor I/E increases* then Aid is justified.
    Tim, you seem to have fallen for a “bait and switch”

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