For God`s Sake - Stop Helping Latin America from Planck's Constant

In my article For Gods Sake - Stop Helping Africa I argued that aid to Africa has only made the continent more dependent on further aid and has caused untold misery to hundreds of millions of Africans.

One would think that what is true for Africa should be true elsewhere as well and indeed it is: A 2006 paper titled "Foreign Aid, Income Inequality and Poverty," from the research department of the Inter-American Development Bank came to the same conclusion regarding aid to Latin America that empirical research shows that aid is ineffective either in "achieving economic growth or promoting democratic institutions." ¹

A tip of the turban Hat Tip to Fausta's Blog who is hosting a Carnival of Latin America and the Caribbean articles.

Mary O'Grady Interview [WSJ Video]: Foreign Aid not only doesn't work it makes things worse:

Notes

(1):

Wall Street Journal, Aid Keeps Latin America Poor
Drawing on the wisdom of Orwell, this is a good time to repeat what is already manifest: Latin America remains poor and backward not despite multilateral "assistance" but, in a large part, because of it. The IDB has been going at the problem of poverty in Latin America since 1959, but it hasn't acted alone. In the postwar period the World Bank, the International Monetary Fund and untold bilateral agencies have blanketed the region with aid. World-wide foreign aid has boomed. According to the Organization for Economic Cooperation and Development, "in 2008, total net official development assistance (ODA) from members of the OECD's Development Assistance Committee (DAC) rose by 10.2% in real terms to USD 119.8 billion. This is the highest dollar figure ever recorded."
There's no problem money can't solve, U.S. Treasury Secretary Tim Geithner believes. Mary Anastasia O'Grady explains. (April 6)

Does it follow that poverty persists because the amounts have been just too measly to do the job? It does for Mr. Geithner and the foreign-aid brigades. But rather than rely on those with vested interests, it's more useful to look at the empirical evidence. A 2006 paper titled "Foreign Aid, Income Inequality and Poverty," from the research department of the IDB itself, looked at the period 1971-2002 and found "some weak evidence that foreign aid is conducive to the improvement of the distribution of income [sic]. When the quality of institutions is taken into account, however, this result is not robust. This finding is consistent with recent empirical research on aid ineffectiveness in achieving economic growth or promoting democratic institutions."

So now that we know it doesn't work, Mr. Geithner wants more of it. This is what the late, great development economist Peter Lord Bauer called "the disregard of reality." In a 1987 essay in the Cato Journal, he called the claim that poverty is a trap that cannot be escaped without external aid an "obvious conflict with simple reality." "All developed countries began as underdeveloped," Bauer wrote. "If the notion of the vicious circle were valid, mankind would still be in the Stone Age at best."