A report published by the Globalization Institute suggests that aid to Africa actually reduces its economic growth. It is a radical claim and hard to prove. As ever, in reviewing the evidence, one must bear in mind that correlation does not prove causation. However I have not yet read the report and perhaps it succeeds in overcoming this difficulty.
The comments of Mr Mbeki (see posting below) certainly offer some possibly explanations of the mechanism of just how aid could, paradoxically, damage economic growth.
It is noticeable how some of the most successful countries in the world - Japan, Switzerland, Hong Kong and Singapore - have been ones with very little in the way of natural resources. They have had no leg up from nature in achieving economic success. Yet perhaps it was the very absence of a 'free lunch' that made such countries adopt pro-enterprise and pro-trade policies which then led to their success. Africa has been showered with 'free lunches' in foreign aid and some of the countries have also had ample natural resources such as gold, diamonds, copper and good agricultural land.
Posted by James Bartholomew • Indexed in Foreign aid
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