Tuesday, October 16, 2007
FREE TRADE, NOT FOREIGN AID
There is an innumerable evidence showing the devastating impact of foreign aid on the economic development of countries in the third world. In fact, free trade boosts growth and accelerates the GDP convergence while protectionist measures such as duties on imports and high tariffs on exports slows growth and impairs growth potentials due to higher costs of trade and international exchange at which markets in 'poor countries' (link) estimate the comparative advantage, i.e. the specialization at producing according to the opportunity costs of producing goods.