Sunday, November 15, 2009

William Easterly's The Elusive Quest for Growth - Chapter 6

Growth between 1982-95 was expected to be between 2.7-3.3%. Yet it ended up being near zero. During this time an average of 3-6 adjustment loans were given to poor countries throughout Latin America, Africa, and Asia. Ghana was one of only a few success stories. The rest were failures.
In some cases no one considered inflationary consequences. In the Soviet break up, aid wasn’t doled out quickly enough.
Many countries kept receiving loans even though they hadn’t followed through on policy reforms. This is sometimes simply because lenders didn’t want their ideas to be failures, so they gave loans in order for countries to pay off old loans.
Easterly and I agree that aid should only be given after good policy is made. I personally am unsure if any country should actually be giving out aid. I believe this is in the hands of private investors and that foreign countries should deal with their own sovereignty issues.

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