Saturday, August 10, 2013

Free trade, Aid and Bono

ASI quotes Bono in what must be an astonishing turnabout or a complete misunderstanding of what 'free enterprise' is: "In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure." Nevertheless, ASI takes him at his word and expands on what needs to be done (and counters some of the common arguments against trade and investment - read the whole thing):

Simply giving developing countries money often does not benefit them in the long term. Even in the short term the aid often fails to reach the people who need it; some of it might diverted to a corrupt government. And sometimes it might be a used to prop up dictatorial regimes.

Free enterprise is the cure because it can enable poor countries to generate wealth instead of depending on tiny transfers of it from richer countries. Developing nations become wealthy by enterprise and trade, not by aid, and inward investment is a potent way of assisting this with a range of spillover benefits. It boosts the business environment by assisting capital investment; around the world it accounts for about 15% of domestic capital formation.

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