Trade No Match for Aid
The Fraser Institute, in a 2002 report entitled “Economic Freedom, Not More Aid, Will Transform Africa,” surprisingly argues that economic freedom is the only thing that can save Africa. The poster child of this report is Botswana, one of few African nations which has seen enormous economic growth in the past four decades.
The report argues through neo-colonialist sentiments that Botswana is a beacon of hope for Africa. Following the reasoning of the report, a perfect world would see all African countries respect private property rights and international patents. They would break down their tariff walls and adopt universal free trade. Then, if they’re lucky, global corporations would see their distress signals and establish export processing zones to alleviate the people from their self-created misery.
I hope that it’s clear by now that I’m not a fan of either the Fraser Institute or the message it expounds. I don’t believe that one development model can fit all developing nations, nor do I believe in the alleged global benefits of free trade. I relish the fact that economists around the globe are exposing this façade for what it is; exploitation and neo-colonialism.
Evidence from China and the ‘Asian Tiger’ nations presented by former senior vice-president of the World Bank, Joseph Stiglitz, proves that alternative models to development can be more effective than the neo-colonial ones dictated by the IMF and right-wing think tanks. When dealing with African issues, these examples must be kept in mind.
Further challenging the the Fraser Institute’s message is a point made by economic historian Ha-Joon Chang. Although developed nations expound the virtues of free trade and its ability to transform developing nations into developed ones, free trade was not the economic route that allowed today’s first world countries to develop.
While development models can be debated, I think a good test of progress is the United Nations Human Development Index (HDI). Botswana is ranked at 128 in the latest report, which is behind other African nations like Egypt, South Africa and Gabon. Egypt, according to the CIA, still lacks “substantial progress on economic reform.” How could a country with a more regulated economy be ranked ahead of one with no economic regulations? The UN, unlike the Fraser Institute, examines not just economic indicators, but human indicators, in their ranking of nations.
When one looks at the social elements of Botswana, a much different picture emerges than the one painted by the Fraser report. The Fraser Institute does look at the AIDS issue, noting that Botswana “does suffer the HIV-AIDS crisis.” What the report fails to mention is that 37.3 percent of the population in Botswana are infected with HIV-AIDS. It also neglects to mention that the average life expectancy for Botswana is a mere 30.76 years.
True to its ideology, the report argues that aid is not the answer to solving this crisis. Instead, the report argues that “aid, on average, has no effect on growth.” Economic growth, apparently, is more important than human life.
This report and the mentality that ‘economic freedom’ is the answer to Africa’s problems is dangerous. I’m not proposing that tightly-controlled, soviet styled economies are the answer. Rather, governments must have the ability to throw up a ‘social security net’ to catch those who fall through the cracks of the global economy.
The AIDS issue demonstrates this point. While global corporations have lowered the price of AIDS drugs in the past year, many Africans still cannot afford them. If Botswana, with its relatively high GDP is still suffering so greatly, what is the situation in a much poorer country like Malawi?
The idea of generic AIDS medication is not a radical issue, it soon may be legalized in Canada. Yet ‘economic freedom’ means that desperate nations would not be able to take advantage of lower-cost AIDS drugs since international patent rights are a part of the free-trade agenda, and come part-and-parcel with what the Fraser Institute expounds. The only thing free about this so-called economic freedom is people’s freedom to continue to die unnecessarily.