Aid vs Trade

Obama made a recent comment regarding Financial Aid and its failure to alleviate the poverty around the world. For a long time financial infusions have been considered at least useful in lifting poor economies. But, as goes the popular Chinese proverb "Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime."

Poor economies are poor because they have little to trade or are prevented from doing so. Skewed political and social structure can lead to economic imbalances while education, skill enhancement and political empowerment tend to reverse it. So long as an economy holds something that is sought after by the rest of the world, it has an insurance against poverty. It will still be at threat by substitutes and alternatives that may develop if the resource becomes too scarce.

Skills and technology are becoming the new global capital. They can be used to leverage ordinary resources like raw material and information into something more useful like products and services. At core for this transformation is the system for education and innovation. The structure of this core determines whether an economy can sustain and improve its status without wasting itself or will it have to exploit whatever natural resources exist and deplete them to extinction.

The real aid that the developed world can provide to the developing is to educate the masses. Not just to read and write but also the skills to pursue a useful profession or trade. This will be the key to global prosperity and should remain to be a strong focus of any Development Program. Allowing free trade will be the icing on the cake.