NCPA - National Center for Policy Analysis

Countries Are Poor Thanks to Bad Policy, Not a Lack of Cash

September 5, 2013

It long has been evident that nations are poor because of bad policies, not inadequate cash balances, which make economic reform, not foreign aid, the key to growth. Unfortunately, politicians continue to take money from poor people in rich countries and give it to rich people in poor countries in the name of development. Now, a new study has found that the United Nations' celebrated Millennium Development Goals have no effect on economic development, says Doug Bandow, a senior fellow at the Cato Institute.

In 2000 government leaders adopted the United Nations Millennium Declaration. Participants set a number of objectives (called the Millennium Development Goals) for reducing extreme poverty by 2015.  The chief tool was expected to be foreign aid.

  • Along the way the United Nations (UN) established the Millennium Project "to develop a concrete action plan for the world to achieve the Millennium Development Goals and to reverse the grinding poverty, hunger and disease affecting billions of people."
  • The UN staged summits, produced reports and adopted "a global action plan." Tens of billions of dollars were pledged for the cause.

Few Americans would begrudge additional money for foreign assistance if the outlays actually reduced poverty. However, the record of more than six decades of financial transfers running in the trillions of dollars (from the United States, other nations, the UN and other organizations, such as the multilateral development banks) is failure.

  • Foreign "aid" turned into foreign hindrance, creating long-term dependency while reinforcing self-defeating collectivist economic strategies and subsidizing authoritarian political systems.
  • The only correlation to growth turned out to be reform, which is discouraged when aid relieves the pain of failure.

If they served any purpose, it was as a political tool to loosen purse strings in industrialized states.  In fact, Dr. Howard Steven Friedman of Columbia University observed that "the Millennium Development Goals succeeded at raising the global awareness of investing in development," and were followed by "a demonstrable increase in the amount of donor funding."  The Heritage Foundation's Brett Schaefer was blunter:  "The most useful aspect of the MDGs [Millennium Development Goals] for the organization is not their impact on development, but rather the public-relations benefits of being able to claim a central role in the progress made in developing countries."

Source: Doug Bandow, "Sorry UN, Countries Are Poor Thanks to Bad Policy, Not a Lack of Cash," Forbes, August 26, 2013.


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