Mr. Obama – Big Aid Does Exactly What For Latin America’s Poor?

You can’t blame the guy for wanting to make a splash in the region after George W. effectively ignored Latin America for much of his presidency. Treasury Secretary Tim Geithner made his way to Medellin to support the IDB’s (Inter-American Development Bank) tripling of the bank’s capital for the region. Since 1959 the IDB has been tossing money at poverty in Latin America along with a host of others. Yet, like Africa, this money flows directly into government coffers, the same government coffers run by the usual suspects of waste and mismanagement that will remain un-named but unfortunately steer some of the region’s biggest economies.

External aid alone cannot engender economic growth or promote democratic institutions. Massive institutional loans like this simply distort the market and empower the status quo. Civic society groups, NGOs, and universities (depending on the country) typically occupy the front lines in the fight against poverty, yet their voices are all too often muzzled and kept at bay. With economic liberty and property rights being the primary drivers of development, how can bloated, inefficient government entities be expected to strategically appropriate aid money to the sectors and beneficiaries with the most experience and knowledge to implement successful programming in the field?

Not all is lost as there are some clear shining stars in the region. But it is major economies such as Venezuela, Argentina, and Mexico that could clearly use more aid money at a grassroots local level to stimulate development. Entrepreneurship and creating space for citizens to accumulate wealth works. Politically, Mr. Obama can get behind this, right?       

2 Comments

Filed under Pole to Pole Development Posts

2 responses to “Mr. Obama – Big Aid Does Exactly What For Latin America’s Poor?

  1. So true, and Latin America is not that much different than a lot of the Caribbean – bigger scale, essentially same problem. We feel it in everything we do though, as our systems are so small that you virtually can’t escape the impact: When there is a population of about 160,000 and 17 government Ministers, what they do – or don’t – is an integral part of your life and life efforts whether you like it or not.

    We see millions of funding wasted even by not being deployed – why? Mainly because of lack of interest by the Civil Service personnel in who’s hands it’s deployment is placed. And the lack of interest is often tied up in their not being able to find a way for ‘their cut’ to be incorporated into the proposals.

    When funding is deployed, real projects are so often ruined by inappropriate persons and agencies being given the work. The damage does not stop there – the psychological impact is that recipients ‘learn’ that things never work, the development they’re looking for and need ‘just isn’t there’. It’s a very difficult barrier to overcome at a later stage if you are lucky enough to get a look.

    I’ve long believed ‘grass roots’ linkages are what’s needed – and not ones that only deal with ameliorating poverty but those that deal also with projects that develop lower-middle income people so the whole upwards movement is kept alive.

    Ok, sorry that my comment is probably longer than your post. Hits a nerve, very close to my heart!

  2. Thanks Finola. It’s always great to get responses from people living in the field. Perhaps the most distressing point is the psychological impact “dead aid” has on the population in question. This can take generations to break and sadly so many are so accustommed to living with rampant corruption that it is somewhat of a novelty if something is actually deployed and helpful.

    But I have faith as I know you do too. Change will come …

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