Recently, I came across an article by Jagdish Bhagwati, a renowned economist at Columbia University. After reading the article I was in a doubtful state of mind.
His main proposal to combat poverty in Africa was ‘If it is hard to think of aid being spent productively in Africa, why not spend elsewhere for Africa”
He was of the view that Africa would not be able to absorb the aid efficiently. So it would be profitable and more pertinent to spend the aid for Africa in Developed countries itself, by conducting research for development of new vaccines and cures for crippling diseases afflicting African nations. I call this proposal strange. Because then Africa for ever after, will’be dependent on these rich nations.
This would further widen the disparities in Income between developing and developed countries. It is a wise plot aimed at reducing aid to developing nations.
He goes further to state that he is against those like Jeffrey Sachs who insists that the aid ought to be spent in Africa itself.
It wouldn’t be difficult to predict the outcome. The rich nations would not have to hesitantly part with the aid, instead they would be able to invest in within their geographical territories itself.
What do you feel about Jagdish Bhagwati’s proposal’
Hmm…Interesting thought. I am a little skeptical, generally of Bhagwati, but this one at least makes me pause. I do see a few problems with the idea:
– How does Bhagwati envision the eventual transfer of benefits to Africa? Whenever that has to happen, the same capacity constraint he points to will still apply.
– I also have general problems with development aid, in particular the inefficiency of capital allocation of what is essentially a planned model, and second the problem of incentives which would plague any institution involved.
You can see my objections on my post:
on An Institutional Perspective on Development Aid
Thanks for the pointer though, and a good introduction to economics generally on your blog. I’m dabbling in it myself, so this helps. Keep the book recommendations coming!
Alex,I watched a few podcasts you had on blogspot.The one by Jeffrey sachs was brilliant,it really thinks out of the box about real issues in Africa.Based on such a perspective,even if malaria or soil research is done outside Africa (outsourced),the implementation will be done a micro level (village to village)in Africa.In that way the major share of the money will be spend in Africa,though some research is done outside.Just what I think,might be flawed 🙂
Well BVN,
Will a company in Africa be able to outsource the work?(To undertake research in Africa’s favour, it is necessary to involve those who are well versed with the local economy.Research and implementation should start at the grass root level.)
Or if the research were to be undertaken by one of the countries of the international community, why couldnt they have done it earlier? The research institutions in the US are highly ranked, why did they never come up with any solutions, earlier?
Implementation will require lots of monies in the form of aid or borrowing too.
But certainly, BVN, what you proposed is feasible. But the resources needed for implementation will be exceeding that needed for research.
I found this post in International Private Enterprise Group on jagdish Bhagwati’s letter to Bono on aid.