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Old aid vs new.


Today was one of those days where the past and the future bump right up against each other and for a moment you can easily see their stark contrast.

The past is this:

Today the Millennium Villages retracted their earlier claims that infant mortality rates had plummeted in their project sites. In fact, as so many pointed out, the methodology was a mess, the math was flawed, rates of decline were roughly equal to overall national rates, and all other indicators had not shown even that much positive change. The Lancet also printed a retraction, but so far Prof. Sachs, the champion of the Millenium Villages, has remained silent. This is the old way of fighting poverty. Large and expensive exercises in planned social engineering funded by never-quite-enough donations from governments and charities.

The future is this:


Poverty Reduction in a Bottle

Today, at the G8 summit at Camp David, President Obama announced “The New Alliance for Food Security and Nutrition“. This deal was successfully brokered by USAID Administrator Raj Shah (and notable aid reformer) and leveraged $3b in private sector investment into the economies of Ethiopia, Ghana and Tanzania. This is an explicit recognition that aid isn’t a sustainable response to poverty. Charity does not create jobs, private sector investment does. Companies like brewer SABMiller (one of the alliance members) are the ones creating jobs. Last year alone they delivered over $14 billion in economic value to emerging markets through their supply chain operations. And if aid donors want to increase this investment, they need to work with the private sector.

The old way of doing things didn’t work. The new way is showing some amazing promise.


UPDATE: SABMiller corrected my earlier data. 70% of their $21 billion global economic impact goes to emerging markets, not just Africa. I corrected the post.

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