All people have different views—and everyone is entitled to their own opinion. In Banerjee & Duflo’s book, Poor Economics, they discuss two opposing views regarding development aid. The first is William Easterly of New York University. Easterly explains that “the real problem of development…is not one of figuring out good policies: It is to sort out the political process. If the politics are right, good policies will eventually emerge” (Banerjee, 2011). In other words, Easterly thinks that the process of developmental aid will only be successful if there is a successful process to go with it. The other view is from Jeffrey Sachs, adviser to the United Nations and director of the Earth Institute at Columbia University in NYC. Sachs believes that “poverty causes corruption, and corruption causes poverty” (Banerjee, 2011). He explains that developmental aid should be given for specific goals: things like malaria control, food production, safe drinking water, sanitation, etc. He thinks that giving aid for these specific reasons would be a more direct and efficient way to help the people in poverty. Although I think both points are well thought out and both make very much sense, I agree more with Jeffrey Sachs. I think it makes more sense and would be most effective to know exactly what we would be focusing on helping with in order to be successful with it. With that focus, better things will come and we could focus more clearly on making people in developing countries less poor in the long-term.
As I researched more into this, I found something I liked a lot from Sachs. On povertyeducation.org, they described the “Cycle of Prosperity.” The Cycle of Prosperity is when “wealth is generated and invested in the economy, creating a second wave of wealth which is once more invested in the economy etc….” and eventually “the poor country becomes rich” (Foreign, 2017). Sachs explains that not all countries can get into the cycle of prosperity. He goes onto say that we should just give underdeveloped countries aid so that they can enter the cycle of prosperity. Once they are in the cycle of prosperity, they can figure it out themselves.
Banerjee and Duflo focus on ending poverty and improving nutrition and food security in underdeveloped countries throughout their entire book. In the conclusion of their book, Poor Economics, they address five main lessons on how to improve the lives of the poor. They explain that people living in poverty are undereducated and are not aware of the dangers of not immunizing their children. They also state that the poor do not have any way of saving in the long-term. Many of them run small businesses to make some money and many cannot take out loans because they know they won’t be able to eventually pay them off. Next they explain that the poor get negative interest rates from their savings accounts and pay exorbitant rates on their loans (Banerjee, 2011). Fourth, they say that failures with helping poor countries often happen because they end up in the wrong person or organizations hands. With that being said, there are some good that comes with this. They state “it is possible to improve governance and policy without changing the existing social and political structures…tremendous scope for improvement even in ‘good’ institutional environments, and some margin for action even in bad ones” (Banerjee, 2011). And lastly, Banerjee and Duflo explain that the poor do not have much confidence in themselves. For example, if a teacher signals that a child is not smart enough, they will drop out of school. Keeping all of this in mind, I know that I want to do whatever I can to help. Before reading this book, I had no idea about the severe poverty these countries face. They both did a great job with making readers understand the problems undeveloped countries run into, as well as made it very interesting to read. At the end, they express how important any kind of help is, and how it might not happen fast, but we can do everything in our power to help and end poverty.
Banerjee, A. V., & Duflo, E. (2011). Poor economics: a radical rethinking of the way to fight global poverty. New York: PublicAffairs.
The Foreign Aid Debate. (n.d.). Retrieved February 27, 2017, from http://www.povertyeducation.org/the-foreign-aid-debate.html