Foreign aid has become a sunset industry, according to Zainab Usma in his recent article in Foreign Affairs. In tracking the demise of USAID and the foreign aid industry, he sees this as an opportunity to focus on industrialization in achieving economic stability and prosperity. To reduce migration pressures and improve economies in poorer regions, global development must be decoupled from traditional aid and focus on industrial transformation. Industrialization, which involves adopting technologies for mechanization and digitization, leads to increased productivity and skills development, shifting workers from subsistence agriculture to higher-productivity sectors like electronics, pharmaceuticals, green technologies, and digital services. This shift is linked to social changes such as more women in formal jobs, more girls in school, and fewer child marriages.
The aid industry’s benefits have been spread too thinly and lack focus on productivity-enhancing sectors. Advocates should enable poorer countries to access development financing for sectors like electricity, telecommunications, and mass transit while addressing illicit financial flows. Among the recommendations for poorer countries is the establishment of stable trading environments and access to wealthy markets, as protectionism does not foster prosperity. Firms in rich nations need to sell to growing markets in developing regions. New codes are needed to guide industrial transformation, regulate resource extraction, and address the ethical implications of new technologies. Embracing industrial transformation can lift people out of poverty and benefit the entire world, ensuring that global development is seen as more than just charity.
Read the Foreign Affairs article here.