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Spring 2008

ISSN 0890-913X

Volume 23, Number 2

Categories: Spring 2008 | Economics

Escaping Poverty: Foreign Aid, Private Property, and Economic Development

Peter T. Leeson, George Mason University

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TheJournalofPrivateEnterprise23(2),2008,39-64EscapingPoverty:ForeignAid,PrivateProperty,andEconomicDevelopmentPeterT.Leeson*GeorgeMasonUniversityAbstractP.T.Bauerboldlyconjecturedtwohypothesesabouttheprocessofescapingpoverty.First,hearguedthatforeignaidnotonlyfailstopromoteeconomicprogressbutmayactuallyretardthisprocess.Second,Bauerarguedthatprivatepropertyrightsarenecessaryandsufficientforeconomicdevelopment.ThispaperevaluatesbothofBauer'scontroversialclaims.First,Iconsiderthetheoreticalmechanismsthroughwhichaidmightdepressrecipient-countrydevelopmentandexaminetheempiricalevidencethataddressesthishypothesis.Second,ItheoreticallyinvestigatetheroleofprivatepropertyineconomicdevelopmentandexaminetheevidenceforBauer'sclaimregardingtheprimacyofprivateproperty.MyanalysisfindssupportforbothofBauer'sprovocativehypothesesandsuggeststha'i-hisworkanticipatedthemostimportantresultsinthecontemporaryfieldofeconomicdevelopment.I.IntroductionInvestigatingthecausesofthewealthandpovertyofnationsisperhapsthemostimportanttaskofeconomics.Whileasizeablepercentageoftheworldprospers,anevenlargerpartstagnatesinrelativepoverty.AccordingtotheWorldBank(2007),"low"or"lower-middle"incomecountriesmakeupmorethanhalftheworld'seconomies.Averageincomeis$875orlessintheformergroupandbetween$876and$3,465inthelatter.ThedepthpovertyreachesinthesecountriesisevenmorestrikingMorethan20percentofthedevelopingworld—1.1billionpeople—subsistsonlessthan$1aday(WorldBank,2005).Insomedevelopingcountries,suchasthoseofSub-SaharanAfrica,morethan70percentofthepopulationlivesin*Thisessaywasthewinnerofthe2007OliveW.GarveyFellowshipContestpresentedbytheIndependentInstitute.39

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Title	Escaping Poverty: Foreign Aid, Private Property, and Economic Development
Authors/Creators:	Peter T. Leeson, George Mason University
Year:	2008
Volume:	23
Number:	2
Pages:	39 - 64
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Economic development, Peter T. Bauer, Foreign Aid, International Cooperation, Property Rights, Poverty, Standard of living

Citation:
Leeson, Peter T. / 2008. "Escaping Poverty: Foreign Aid, Private Property, and Economic Development." The Journal of Private Enterprise, 23(2): 39-64.