-An­gusDeaton

Financial Mirror (Cyprus) - - FRONT PAGE -

one of the ma­jor causes of poverty and de­pri­va­tion around the world. With­out ef­fec­tive states work­ing with ac­tive and in­volved cit­i­zens, there is lit­tle chance for the growth that is needed to abol­ish global poverty.

Un­for­tu­nately, the world’s rich coun­tries cur­rently are mak­ing things worse. For­eign aid – trans­fers from rich coun­tries to poor coun­tries – has much to its credit, par­tic­u­larly in terms of health care, with many peo­ple alive to­day who would oth­er­wise be dead. But for­eign aid also un­der­mines the de­vel­op­ment of lo­cal state ca­pac­ity.

This is most ob­vi­ous in coun­tries – mostly in Africa – where the gov­ern­ment re­ceives aid di­rectly and aid flows are large rel­a­tive to fis­cal ex­pen­di­ture (of­ten more than half the to­tal). Such gov­ern­ments need no con­tract with their cit­i­zens, no par­lia­ment, and no tax-col­lec­tion sys­tem. If they are ac­count­able to any­one, it is to the donors; but even this

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