Jul 31, 2014

How to Help Developing Countries Effectively?

These days everything is getting smart. Beginning from our phones we are in an endless quest to smarten up every gadget we have been using in our daily lives. The quest has resulted in revolutionizing majority of the industries of the world by changing the way people interact with each other as well as the machineries. Unfortunately the same cannot be said of a few institutions and industry, most notably of the global aid industry. The global aid industry has been spewing billions of dollars for endless list of causes around the world. And yet, the effectiveness of aid in helping developing countries stand on their own has been debated again and again. Among the myriads of issues faced by developing countries what are the most important issues, which issues should be the priority for the development aid agencies? This is one question that has never been properly answered. Which issue gets the largest share of aid money at any point of time, seems to be determined by the hype and glamour the issue is commanding at the time.

In this context, Matt Ridley has come up with these five priorities for the development aid to focus on if they really want to make an impact to the developing countries. These five priorities are not based on his personal preference though. It makes economic sense to invest in these priorities as they have been found out to bring the highest return on per dollar spent on the cause. The priorities were determined based on the extensive cost benefit analysis done by The Copenhagen Consensus Center, an internationally reputed think tank.

According to Ridley, following are the issues rich countries should be spending aid money on if they really wanted to help poor countries:

1. Reduce malnutrition. When children get better food, they develop their brains, stay in school longer and end up becoming far more productive members of society. Every dollar spent to alleviate malnutrition brings $59 of benefits.

2. Tackle malaria and tuberculosis. These two diseases debilitate huge populations in poor countries, but they are largely preventable and curable. In the most harshly affected countries, two people often do one person’s work because one of them is sick. Benefit to cost ratio: 35 to 1.

3. Boost preprimary education, which costs little and has lifelong benefits by getting children started on learning. 30 to 1.

4. Provide universal access to sexual and reproductive health, which would save the lives of mothers and infants while enabling women to be more economically productive. It would also lower birthrates (when fewer children die, people have fewer children). Benefits could be as high as 150.

5. Expand free trade. This isn’t considered sexy in the development industry, and it may seem remote from humanitarian issues, but free trade often delivers phenomenal improvements to the welfare of the poor in surprisingly quick time, as the example of China has demonstrated in recent years. One of the discoveries of the Copenhagen Consensus process is that incremental goals such as expanding free trade are often better than supposedly “transformational” goals. A successful Doha Round of the World Trade Organization could deliver annual benefits of $3 trillion for the developing world by 2020, rising to $100 trillion by the end of the century.

You can read Ridely’s complete article at this link.

What do you think of these five priorities? One of the popular causes, climate change has not made it to the list. What is your opinion on it?