Tuesday, 12 July 2011

Why countries stop being (very) poor

Great article on the drivers behind the move from low-income to middle-income for countries like Zambia and Ghana. Particularly like this bit:

So what's behind all of this sudden income growth? Is it a story about aid? One prominent Zambian, Dambisa Moyo, has written of her country that "a direct consequence of the aid-driven interventions has been a dramatic descent into poverty. Whereas prior to the 1970s, most economic indicators had been on an upward trajectory, a decade later Zambia lay in economic ruin". In the 1980s, aid to Zambia averaged about 14% of the country's GNI. In the 2000s, a decade of strong growth, the same proportion was 17%. If Zambia's ruin in the 1980s was the result of aid, is Zambia's graduation to middle-income status in the new millennium a sign that aid now works really well?
Of course both the ideas that previous stagnation was all the fault of aid, or current growth was all the result, are ridiculous. 

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