Focus Point - Third World PovertyCommentary by Pete du Pont
July 31, 2001
I'm Pete du Pont with the National Center for Policy Analysis. After 50 years of pouring billions of dollars into the third world to alleviate poverty, what do organizations like the World Bank and the International Monetary Fund have to show for it? Not much. In fact, living standards in many poor countries actually declined?
A new book by William Easterly suggests a convincing reason why: the IMF and the bank assume all that's needed for economic success is hardware: plants, equipment, machinery. Increase investment, prosperity follows.
But in "The Elusive Quest for Growth," Easterly shows why this failed over and over. Giving someone a piece of equipment will increase his productivity; giving him two pieces won't. Just piling on the capital -- like foreign aid -- won't spark growth. What does is better technology and teaching people how to use it, typically in some cooperative venture.
Foreign aid, meanwhile, is little different from welfare. The donor has no reason to care how it's spent; it's not, after all, an investment. When the people giving the money have a stake in the outcome, there's a chance the outcome will be successful.
Those are my ideas, and at the NCPA we know that ideas can change the world. I'm Pete du Pont. Next time, good english.