At yesterday’s OPEN DC event Shaukat Aziz (former PM and FM of Pakistan) answered an audience question by talking about how IMF funding causes nations to give up economic sovereignty – this was a great point, and a very timely one given today’s economic ‘crisis.’  Aid from international financial institutions comes with rules, and currently, those rules are largely based on the ‘Washington Consensus‘ guidelines for economic growth.  Unfortunately, as economist Dani Rodrik presented in his recent book (‘One Economics, Many Recipes’), these western-built guidelines for growth may be obsolete, and at best, can use a few edits.

Some nations have received so much aid from international financial institutions that their debts have had to be pardoned…more than $40 billion in foreign debt was totally written off in 2005 for 18 nations (14 of them African).  When countries are spending most of their money on repaying debts – and forgoing critical domestic improvements – they’re terminally screwed.  It’s called foreign ‘aid’ – loans granted to spur growth by organizations like the World Bank and African Development Bank – but aid turns into a burden as it instantly becomes debt.  This is where the head scratching starts… Continue reading …