From Investment to Growth

I just listened the Easterly on Growth, Poverty, and Aid. I believe that there is a misunderstanding on making investment to improve the development of poor countries. They think investment can be a trigger to the growth, or more investment will cause faster development. I simply think this idea is wrong.

Even putting some investment into a poor African country, this investment faces the competition from others. If it has some kind of comparable advantage, this investment works, and will make the life condition better. Otherwise, it is just another failed business case.

Follow this idea, the foreign aids is not totally waste, but a huge waste. It adds up the stock that the poor people can consume. But it did not improve any bit of the efficiency.