The Economist: Helping Africa Help Itself [1], The $25 Billion Question [2], Doing Business in Africa [3]

In light of the G8 summit, The Economist published several articles related to foreign aid to Africa in this week's edition. One, Helping Africa Help Itself [4], advocates foreign aid on the basis that it constitutes a relatively small amount of rich countries's GDP, and that a few foreign aid projects, particularly in disease eradication, have had large impacts on the lives of the poor. Another,The $25 Billion Question [5], includes shocking statistics of the misuse of foreign aid, due to the inability of donors to properly align the incentives of government bureaucrats to ensure that they use the aid as intended by the donors. A third, Doing Business in Africa [6], describes the healthiness of the business climate in Africa, and the success of large, African firms.

Despite the misleading byline on the cover page (Helping Africa Help Itself [7]), this edition of The Economist does not include one article on the potential of private, African firms to reduce poverty in Africa. The articles focus on the standard issues: the barriers that corrupt governments and their bureaucracies pose to foreign aid, the temporality of donor assistance, and the effectiveness for foreign aid at spurring economic growth.

Economic indicators suggest that other approaches to development have more potential than foreign aid. As Bill Kramer quoted the EU Trade Minister in his last post, a 1% increase in trade would equal a seven-fold increase in foreign aid. Remittances, money transfers via wire that many immigrants use to send money to their relatives and friends in their home countries, reached $116.6 billion in 2003, whereas foreign aid from OECD countries only equaled $69 billion in that same year, according to the World Bank [8]. Although the authors of Helping Africa Help Itself [9] rightly point out that foreign aid projects should not be trivialized, the relative small size of foreign aid suggests that stronger and more effective tools exist to reduce poverty in poor countries.