Does too much aid lead countries to become aid dependent? Clearly this is a possibility, and one that some aid critics believe is an inevitability. But I wouldn't say that aid is necessarily habit forming. The key issue is whether the aid is sustainable—in other words, whether the recipient country is taking the necessary steps to wean itself off aid over the longer term.
When I was growing up I heard a lot of stories about my grandfather. He died when I was a child so my recollection of him is a little hazy, but one thing sticks out very clearly in my mind: he believed in educating his daughters.
For the last hundred years the big organizational question has been whether any given task was best taken on by the state, directing the effort in a planned way, or by businesses competing in a market. This debate was based on the universal and unspoken supposition that people couldn’t simply self-assemble; the choice between markets and managed effort assumed that there was no third alternative. Now there is.
In The Rise and Decline of Nations, Mancur Olson argued that interest groups like business associations (BAs) always pursue distributive objectives, seeking unproductive rents rather than benefitting the public. Subsequent work on collective action culminating in the New Institutional Economics continued to adopt this negative view of BAs.
In a previous post, I had talked about problems due to power outages faced by retailers in India using Enterprise Survey’s data on 1,948 retail stores. I provided evidence showing that losses due to power outages (as a % of the annual sales of stores) and hours of power outage in a typical month were much higher for low-income lagging states compared with more developed leading states in India.
The retail and wholesale sector in India is among the biggest in the country, yet it receives little attention from policy makers and researchers. The sector accounts for about 14% of India’s GDP and over a quarter of the value added in all services sectors. It is the second largest employer (after agriculture), providing over 10% of all formal jobs in the country.
In previous posts, I discussed the crime and security situation for firms in Latin America and the Eastern Europe and Central Asia (ECA) region. I have begun rolling data from the Enterprise Surveys for 21 countries in Africa, and the initial results suggest that crime imposes as heavy a burden on firms in Africa as in Latin America. On average, losses due to crime and security expenses average about 2.7% of the annual sales of a firm in Africa.
One might think that firms in low-income countries suffer more crime-related problems than those higher up the development ladder. Low income levels, higher unemployment and the haphazard development of urban centers in low-income countries might contribute positively to crime. Consequently, losses due to crime and expenses on security incurred by firms may be higher in these countries.