Foreign Assistance Creates a Two-Track Economy
Perpetuating the gap between rich and poor
The head of the World Bank in Kenya recently created furor when instead of dealing with the local police in standard procedures for someone who was caught driving 2x the local speed limit he called the national head of anti-corruption to complain that he was being shaken-down.
This incident is an example of the facade of development. Development, especially the World Bank, is set-up to fail. The expats in the developing world get huge salaries and benefits, way out of proportion to the local economy. This creates a two-tier economy. Businesspeople create European quality housing and restaurants and other services in-country for the huge industry that development continues to be. This two-track economy just perpetuates itself creating animosity and is just the worst kind of corruption where cash is spread around unsustainably. And does nothing to help the local people except turn them into those catering to the rich expats as opposed to developing skills which actually create wealth.
I saw this in Mozambique right after the civil war ended when I visited Maputo for a weekend holiday. Mazambique, which is rich in culture and natural resources, was the victim of many years of Portuguese colonialism, then as a reaction to that, years of Marxist idealism and civil-war. The UN helped to broker the peace, then overtook Maputo in its unsubtle way, with 100s of white UN vans tooling around the UN 'experts' like a conquering army.
These experts, who went to all the nightspots in their official vehicles, swarmed Maputo and drove-up the prices of everything. This is just one extreme example. Same thing in the ex-Soviet Union, where all the ex-Communist Party member elites' housing was just rennovated to make-ready for the new elite, the development industry.
Back to the Kenya example. The World Bank lends money to its host governments at below market rates (actually we dont know the market rates as the World Bank is too busy distorting the market by falling over itself to lend these often corrupt and unaccountability governments money driving out any kind of market discipline on the borrowers). This WB money substitutes for any kind of sustainable rational fiscal policy on behalf of the borrower governments. This creates huge bureaucracies to lobby and work with development institutions and it is just a continuing downward spiral of economic distortion. But I guess good work if you can get it. But if you get it how do you live with yourself ?
The fact that "development" just perpetuates elitism is witnessed by the the development industry's non-cooperation (even as some kind of experiment to see what corruption is like on the ground ?, whats wrong with the dude, has your plush life removed all kind of intellectual and professional curiosity?) with local officials in Kenya. The problem does indeed go straight to the top.
The head of the World Bank in Kenya recently created furor when instead of dealing with the local police in standard procedures for someone who was caught driving 2x the local speed limit he called the national head of anti-corruption to complain that he was being shaken-down.
This incident is an example of the facade of development. Development, especially the World Bank, is set-up to fail. The expats in the developing world get huge salaries and benefits, way out of proportion to the local economy. This creates a two-tier economy. Businesspeople create European quality housing and restaurants and other services in-country for the huge industry that development continues to be. This two-track economy just perpetuates itself creating animosity and is just the worst kind of corruption where cash is spread around unsustainably. And does nothing to help the local people except turn them into those catering to the rich expats as opposed to developing skills which actually create wealth.
I saw this in Mozambique right after the civil war ended when I visited Maputo for a weekend holiday. Mazambique, which is rich in culture and natural resources, was the victim of many years of Portuguese colonialism, then as a reaction to that, years of Marxist idealism and civil-war. The UN helped to broker the peace, then overtook Maputo in its unsubtle way, with 100s of white UN vans tooling around the UN 'experts' like a conquering army.
These experts, who went to all the nightspots in their official vehicles, swarmed Maputo and drove-up the prices of everything. This is just one extreme example. Same thing in the ex-Soviet Union, where all the ex-Communist Party member elites' housing was just rennovated to make-ready for the new elite, the development industry.
Back to the Kenya example. The World Bank lends money to its host governments at below market rates (actually we dont know the market rates as the World Bank is too busy distorting the market by falling over itself to lend these often corrupt and unaccountability governments money driving out any kind of market discipline on the borrowers). This WB money substitutes for any kind of sustainable rational fiscal policy on behalf of the borrower governments. This creates huge bureaucracies to lobby and work with development institutions and it is just a continuing downward spiral of economic distortion. But I guess good work if you can get it. But if you get it how do you live with yourself ?
The fact that "development" just perpetuates elitism is witnessed by the the development industry's non-cooperation (even as some kind of experiment to see what corruption is like on the ground ?, whats wrong with the dude, has your plush life removed all kind of intellectual and professional curiosity?) with local officials in Kenya. The problem does indeed go straight to the top.
posted by Cameron Weber at 10:40 AM
<< Home