- The Washington Times - Saturday, June 1, 2002

Treasury Secretary Paul O'Neill, on a fact-finding tour of Africa, found himself under attack this week by traveling companion Bono for daring to question the need for large increases in foreign aid to poor countries. "You need big money for development," declared the Irish rock star. "If the secretary can't see that, we are going to have to get him a new pair of glasses and a new set of ears."

There is a critical flaw in Mr. O'Neill's corrective: They aren't rose-colored. Western nations, it's true, deserve some of the blame for the Third World's economic troubles. But the problem is not so much what the advanced democracies refuse to do for Africa and other poor areas. It's more what we prevent them from doing for themselves.

Mr. O'Neill has not ruled out additional Western funding, but he thinks the burden should be on recipient countries to prove a given expenditure will actually do any good. His skepticism is based on the long record of development assistance, which can be summarized by a look around Africa. If foreign aid were the solution, Africa would have few problems. The continent that Bono thinks is crying out for new help is in that position only because most of its governments have failed to make good use of past help.

Bono talks of all the valuable and inspiring efforts being made in Africa. Maybe if he were personally supervising each disbursement, Western taxpayers could count on getting positive results for their money. In the real world, however, dollars shipped overseas to finance good works often end up being wasted or stolen.

The World Bank, which administers billions of dollars in such assistance, acknowledges that particularly in Africa, such efforts have often been "an unmitigated failure," facilitating "incompetence, corruption and misguided policies." Ian Vasquez, a scholar at the Cato Institute, looked at 73 nations that got development assistance between 1971 and 1995, and found that "neither aid per capita nor aid as a percentage of GDP was positively correlated with economic growth."

How much aid a country got had absolutely nothing to do with its overall prosperity. Aid can help countries that do the right things. Elsewhere, it's about as helpful as an umbrella in a hurricane.

If countries want to escape poverty, they need to protect property rights, establish the rule of law and promote free markets, as well as deliver public services in an honest, efficient manner. Unfortunately, even if they do all these things, they may find their way blocked by the same countries that have furnished so much development assistance.

International trade has the potential to do wonders in Africa and other stagnant areas of the globe. The international humanitarian group Oxfam says that if the developing countries "increased their share of world exports by 5 percent, this would generate $350 billion 7 times as much as they receive in aid." If sub-Saharan Africa had done nothing more than maintain the share of world exports it possessed in 1980, the average African's income would be double what it is today.

Americans want Third World countries to do all they can to lift themselves up. But when they try, they find Westerners scrambling to push them back down. Affluent nations often make it impossible for Third World exporters to participate in the world economy. Third World producers trying to export to rich countries face tariffs averaging nearly 13 percent, nearly fourfold the duties encountered by producers from rich countries.

Poor countries that might sell agricultural commodities in the West also face another hurdle government subsidies to farmers in rich countries, which amount to $1 billion a day and serve to discourage imports. Textiles and apparel, where poor countries often excel, are still tightly restricted in the United States and other advanced economies. We want developing nations to compete in the world economy but without inconveniencing our own producers, thank you. All these barriers cost poor countries about $100 billion a year, which is twice as much as they get in assistance.

"The biggest request we are making of Western countries is to open their markets," Ugandan President Yoweri Museveni said recently. "Debt relief has saved us some money, but the real money will come from trade. Give us the opportunities, and we will compete."

Isn't that the kind of talk we've been yearning to hear from Africa? If we opened our markets, a lot of poor nations would be able to build vibrant economies and stand on their own two feet. They would also speed the day when rich and poor alike can celebrate the obsolescence of foreign aid.



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