A Different Kind of Aid in Africa
Responding to allegations that Africa is submitting to a new era of colonialism, economist and bestselling author Dambisa Moyo describes a different scene. In a recent article in the New York Times, Moyo enthusiastically observes that the African economy is reaching for new horizons—and China is helping it get there.
As the two countries continue to engage in a give-and-take affair of comparative advantages, it becomes clear that this Ricardian relationship (and others like it) may have more to offer the continent of Africa than cash in its nations' treasuries; it may provide much-needed stability at both the societal and administrative levels as well as the tools for sustained growth.
The free market has a role to play in Africa. Rich in land and labor, much of the continent lacks the financial and human capital necessary to employ its rising population, over 50% of which is under the age of 24. Foreign investment is absolutely necessary to help African nations to build upon their available factors of production.
China to the rescue. Not lacking in technological and monetary means and in dire need of appeasing its own constituents, China is urgent to continue its rate of economic growth. Africa offers the solution by providing space for Chinese corporations to construct industrial sites in key regions of the continent. The result: Africans are employed, the African private sector is empowered, and China gains the resources it needs to sustain its current level of expansion.
As African states continue to seek stable positions in the global economy, one-way altruism cannot be the foundation upon which their systems are built. Nor will foreign checks, given to ensure that external preferences are upheld, help to decrease corruption in a political state. Instead, we find that many African economies are anxious to engage in mutually beneficial relationships, the majority of which have the added benefit of putting control back into the hands of the African private sector and peoples.
Once liberated from aid riddled with fine print and expectations, Africa will have more political space to capitalize upon its own assets and to pursue more economic relations similar to that shared with China. If the continent continues to engage in relationships hinged upon comparative advantage at both the societal and governmental levels, I suspect we will see an increasingly stable Africa.
Let's explore the concept of comparative advantage as it relates to the deeper realm of society. While pursuing such far-sighted goals, what is to be done about the millions of Africans living in poverty right now? Clearly aid programs are needed in many areas of Africa and other underdeveloped regions of the world. And many already existent programs should continue to be supported. However, as we have already discovered, the source of a country's stability cannot, ultimately, come from a check.
But consider a different form of aid. Brian Fikkert and Steve Corbett, professors at Covenant College and authors of "When Helping Hurts," suggest a means of helping those in need that does not depend upon a certain sum to be distributed by often-corrupted country leaders. Instead, they propose a microeconomic approach to alleviating poverty.
Non-governmental organizations such as the Chalmers Center and Freedom From Hunger give the poor the means to sustain their own growth. Via small business loans and entrepreneurship classes, these groups and others like them teach individuals how to be bring themselves out of poverty and to organize their communities in ways which utilize the strengths of all its members. This is comparative advantage on a much smaller scale, the free market at work in communities.
I'm a realist; capitalism is not the panacea to the myriad of problems faced by developing countries. Valuable factors of production can just as easily be wrapped up in corruption and instability as foreign payoffs (the blood diamond market comes immediately to mind).
In addition, a young private sector is not going to instantly provide the infrastructure needed for a state to be competitive in today's global market or safety from militant war lords. Those things take time and, in many cases, government collaboration.
That being said, take a moment to consider the benefits the free market brings to the table. An economic system driven by self-improvement and personal ambition can decrease the problem of foreign and special interests, increase the flow of capital into countries, and enable the people to hold their own governments accountable. And that is something substantial.
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