Development aid to underdeveloped countries is a controversial topic. Some people argue that such aid is a moral imperative, the only means of preventing human misery. Others argue that it undermines local markets and prevents people from developing the institutions that will ultimately enable them to take care of themselves.
One idea is to give everyone a Basic Income Grant (BIG) so that people have enough money for food, basic health care, school fees, and to set up a small business so they can take their lives into their own hands.
Via Crooked Timber
There is now empirical evidence supporting this line of reasoning, coming from Namibia, where in 2004 a coalition of churches, trade unions, NGOs and AIDS organisations decided to run a pilot project to figure out what a small BIG would do to the lives of the extreme poor.
The BIG Coalition raised money which allows them to give a BIG of 100 Namibian Dollars to each individual which was registered in July 2007 as living in the Otjivero-Omitara area, about 100 kilometres east of Windhoek (pensioners were excluded as they get an unconditional state pension). The amount is small, since the food poverty line stands at 152 Namibian dollars per capita, whereas the poverty line counting “the severely poor” stands at 220, and the official poor are all those living on less than 316 Namibian dollars per month.
As the study of the effects of the BIG after one year clearly demonstrate, the effects are strikingly positive. The percentage of those falling below the food poverty line has dropped from 76% to 37%. The percentage of those being able to get a job or become successfully self-employed has increased from 44 to 55%, and the amount of non-BIG income per capita rose from N$ 118 to N$ 152 (indicating a virtuous economic growth cycle). The number of underweight children has dropped from 42 to 10%. School attendance has gone up, and teachers report that the children are better able to concentrate. The health clinic receives many more patients (for illnesses that would otherwise not have been treated). Average household debt fell from N$ 1,215 to N$ 772. Crime rates fell by 42%, and there is no evidence that alcohol-abuse (which is a serious problem in many poor areas) has worsened. (Further details are in the report, together with interviews documenting the experiences of the people who have been given the BIG).
There is some skepticism about this report discussed in the comments section at Crooked Timber. (It is worth checking out the conversation) But if the data holds up, it is stunning example of how relatively small amounts of targeted assistance can make a huge difference in people’s lives.
This experiment certainly bears watching.
