Asymmetrical Information

From the desk of Mindles H. Dreck:

What I Said..

There's been lots of renewed grumbling about American stinginess in foreign aid since the Bono/O'Neill tour.

Public "Official" aid is not necessarily superior to private aid, where Americans are particularly generous (see "update" and linked post below). Military aid (such as policing shipping lanes) can be critical to the successful delivery of any other kind of aid. The U.S.'s unfunded credit backing, not counted in direct aid figures, saves many (controversial) aid-providing international organizations billions of dollars. There may be a case for more public funded aid, but the U.S. is far from "stingy" in terms of actual value gifted to other economies.

I provided more detail (with help from Steven Den Beste) some time ago.

UPDATE: Leonard Dickens dug up a recent analysis of the (2000) ratio of private vs. official aid and posted it in the comments thread Jane Galt's site. Yup, U.S. is tops. Only Ireland is in the same ballpark (see page 26 of the link). Interestingly, this paper claims to quantify the "crowding out" effect of official aid on private aid (although the author suggests the resulting total aid may or may not be larger, depending on the nature of the donor economy).

One precious footnote from the paper:

Net private aid from France is almost non-existent

Official aid kept Mobutu in power in the former Zaire, even when we tied the aid to rice imports. Official aid is often restricted, by diplomatic necessity, to using corrupt government channels for aid delivery. Can private aid circumvent local corruption any more effectively? While we have established there is significant private aid coming from the United States, I have a feeling the relative effectiveness of each type of aid is a complex subject.

Posted by Mindles H. Dreck at May 31, 2002 3:48 PM | Technorati inbound links"); ?>