More often than not, foreign aid goes to the established cronies within a developing country’s hierarchy. The big shots in the capital get paid, buy Mercedes Benz’, armor plate them, erect fortresses with satellite TV and guards with assault rifles. Meanwhile just outside of the walls of the compound children pick through the dirt for food while their mothers walk miles for potable water.
Top down solutions do not work. In fact they are almost never “solutions” at all. Dumping 50 million dollars onto Congo isn’t going to help the country that is for sure. What is for sure is that more weapons will be purchased and that the bush wars (which have claimed millions of lives over the last decade) will continue. Murder and rape are enabled by well meaning (for the most part) developed countries.
The solution to poverty comes through entrepreneurialism. Where there are property rights and contracts are honored, wealth tends to grow. Fertile economic soil contains these elements.
In contrast an economy which is based on favoritism, on gifts given from on high, will never prosper. Cronyism is like salt in the economic soil. Africa, Central and South Asia, and much of Latin America are testaments to this truth.
(From The Independent Institute)
“Aid is just a stopgap,” he said. “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.”