Douwe Osinga's Blog: Third World Aid

Monday, August 4, 2003

Development aid is a rather untractable problem, like education or the punishment of criminals by jail terms. We realize that the current situation where some people are very poor and others very rich, cannot or rather should not go on. But we don't know what to do about it, so we give aid (sometimes). Unfortunately, all statistics tell us that aid doesn't really help and that only 5% or so of the money gets where it should go. Sad but true.

Aid organization spend a lot of money on wages. A major problem is that we send western experts to third world countries, who demand western wages and if not, because they're good people, they'll demand western living conditions. But western experts are usually not as productive in the third world as they would have been in the western world. Paying them as if they were distorts the market.

Maybe it would be more sensible to hire third world experts from different countries. Like Indian engineers to solve African problems. India is of course a third world country, but one that has solved some of the basic problems and is very much developing. Africa seems to struggle with some of the problems that India has solved already. It seems to me that Indians are then in a better position to help the Africans than the western people. The west should of course still provide the money.

Wouldn't this draw away Indian experts from India, thereby starving the subcontinent of knowledge it needs it self? Probably not. India is in a phase where it can make use of extra capital rather effectively. The scheme would help India raise capital in return for expertise. And the cultural exchange would be valuable to all parties involved.