how to get from here to there; which specific actions contribute to free
markets and good institutions; how all the little pieces fit together.
That is, we don’t know how to achieve development.
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Easterly doesn’t think we should give up trying to help people in poor
countries. Instead, we should do small, context-sensitive projects with
measurable benefits. He writes, “[Aid] could seek to create more opportunities
for poor individuals, rather than try to transform poor societies.”
To be fair, the primary stumbling block to development in poor countries is
not bad advice from rich countries. The best ideas for economic growth are quite
simple, yet, as this chapter has pointed out, there are plenty of leaders in the
developing world doing the economic equivalent of smoking, eating
cheeseburgers, and driving without their seat belts. A study done by the Harvard
Center for International Development of global growth patterns between 1965
and 1990 found that most of the difference between the huge success of East
Asia and the relatively poor performance of South Asia, sub-Saharan Africa, and
Latin America can be explained by government policy. In that respect, foreign
aid presents the same kind of challenges as any other welfare policy. Poor
countries, like poor people, often have very bad habits. Providing support can
prolong behavior that needs to be changed. One study came to the unsurprising
conclusion that foreign aid has a positive effect on growth when good policies
are already in place, and has little impact on growth when they are not. The
authors recommended that aid be predicated on good policy, which would make
the aid more effective and provide an incentive for governments to implement
better policies.
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(Similar criteria have been proposed for relieving the debts of
heavily indebted poor countries.) Of course, turning our backs on the neediest
cases (and denying bailouts to countries in crisis) is easier in theory than it is in
practice. In 2005, the World Bank published a document that might qualify as
bureaucratic introspection—
Economic Growth in the 1990s: Learning from a
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