RESEARCH BRIEF | January 2020

ec nfip
Economics for Inclusive Prosperity

Restraining Ourselves:
Helping by Not Hurting
Nathan Nunn*

In this brief, I discuss the current state of economic development policy, which tends
to focus on interventions, usually funded with foreign aid, that are aimed at fixing
deficiencies in developing countries. The general perception is that there are inherent
problems with less-developed countries that can be fixed by with the help of the Western
world. I discuss evidence that shows that the effects of such ‘help’ can be mixed. While
foreign aid can improve things, it can also make things worse. In addition, at the same
time that this ‘help’ is being offered, the developed West regularly undertakes actions
that are harmful to developing countries. Examples include tariffs, antidumping duties,
restrictions on international labor mobility, the use of international power and coercion,
and tied-aid used for export promotion. Overall, it is unclear whether interactions with
the West are, on the whole, helpful or detrimental to developing countries. We may
have our largest and most positive effects on alleviating global poverty if we focus
on restraining ourselves from actively harming less-developed countries rather than
focusing our efforts on fixing them.

Introduction
Understanding how to eradicate global poverty and other obvious strategies that are beneficial. I find that
improve the economic wellbeing of the poorest while foreign aid can help, it can also make things
communities in the world is among the biggest worse. In addition, at the same time that this ‘help’ is
challenges facing academics and policymakers today. being offered, the developed West regularly undertakes
To date, the fight against global poverty has tended to actions that are harmful to developing countries. It
focus on the use of foreign aid and policy interventions is possible that we might have our largest and most
as the primary tools that can be used to help developing positive effects if we focus on restraining ourselves
countries and improve economic growth. In this brief, I from actively harming less-developed countries rather
discuss whether the current development strategies are than focusing our efforts on fixing them.
the best we have to employ and whether we are ignoring

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting econfip.org
The Current Focus for recipient countries. It is estimated that the tying of
aid raises the costs of goods and services by 15–30% on
One of the primary tools used to alleviate poverty is average, and for food aid specifically this figure is over
foreign aid, which is the transfer of money, commodities, 40% (Clay, Geddes and Natali, 2009).
or services from a foreign country or international
organization for the benefit of the recipient country’s We also know that large proportions of aid go missing.
population. It takes the form of grants or concessional Reinikka and Svensson (2004) study World Bank-
loans and is typically classified into economic aid, funded capitation grants in Uganda that were intended
military aid, and humanitarian (emergency) aid. The to pay for all education-related expenses other than
most common form of aid is official development teacher’s wages and buildings. The authors develop a
assistance (ODA), which is primarily comprised of way of measuring the amount of the funds that actually
bilateral grants. When using the term here, I am also reached the school. They find that the median school
including transfers across borders by foundations, in their sample received 0% of its funds (i.e., 100% was
religious organizations, and NGOs, but not remittances stolen). Across all schools, on average, 87% of the funds
between friends and family. went missing. Using the same protocol, they also find
similarly high rates of fund capture elsewhere: 49% in
On the ground, foreign aid is used to fund a range of Ghana, 57% in Tanzania, and 76% in Zambia. This theft
projects that take a wide variety of forms. There is ample is not isolated to the African context. Years later, Olken
evidence that many of these projects have sizeable (2007) also applied the protocol to road maintenance
benefits. For example, we know that the deworming aid projects in Indonesia and found that approximately
program, which was organized and implemented by the 30% of funds went missing.
Dutch NGO International Christelijk Steunfonds Africa
(ICS) in Busia, Kenya, led to school attendance and Having such resources ‘up for grabs’ potentially affects
higher adult wages (Miguel and Kremer, 2004, Baird, the incentives of the most talented and entrepreneurial
Hicks, Kremer and Miguel, 2016). We also know that in in a country, increasing the likelihood that they end
Kenya, large-scale unconditional cash transfers given up engaging in zero-sum rent-seeking activities rather
by the U.S.-based NGO GiveDirectly (GD) increase than productive activities that are more likely to be
household assets, monthly revenues, and psychological beneficial for the country as a whole (Bhagwati, 1982).
wellbeing (Haushofer and Shapiro, 2016, 2018). Although convincing empirical estimates of the causal
effects of foreign aid on corruption remain elusive due
While there are clearly benefits, there are also many to measurement and identification challenges, given
who voice concerns that foreign aid may also have the findings of Reinikka and Svensson (2004) and
other unintended effects that are deleterious. Because Olken (2007), it is almost tautological that aid increases
such effects are unexpected and unforeseen, they tend corruption. Given that aid increases the amount of
not to be measured or evaluated. Thus, we have a very funds available, a fraction of which are stolen through
poor understanding of the magnitudes of such effects. corrupt activities, then this must increase the incidence
However, there are many reasons to think that they are and amount of corruption. Of course, it is possible that
non-trivial. even though aid increases corruption today, because it
increases economic growth, it may reduce corruption in
One established fact about the aid industry is that foreign the future. However, the evidence for growth-promoting
aid is generally shaped by the strategic or economic effects of foreign aid remains elusive (Werker, Ahmed
needs of the donor countries (e.g., Alesina and Dollar, and Cohen, 2009).
2000, Kuziemko and Werker, 2006). Historically, the
majority of foreign aid has been “tied,” meaning that Many academic studies have found explicit evidence
the concessional loans or grants that are given come for adverse consequences of foreign aid. Haushofer,
with the requirement that they be used to purchase Reisinger and Shapiro (2015) estimate the effects of
the products of the donor country. The United States unconditional cash transfers (UCT) on the neighbors
continues to be the country with one of the highest of recipients. They show that one’s happiness is reduced
proportions of aid that is tied. While the tying of aid is when one’s neighbor receives an UCT. Interestingly, this
beneficial for the donor country since it is effectively is true whether or not the individual also receives a cash
a form of export promotion, it poses significant costs transfer. Werker et al. (2009) exploit variation in oil

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting 2

prices which drives aid contributions of oil-rich OPEC humanitarian aid (e.g., food aid) for cash, or by freeing
countries in the Middle East to less-developed Muslim up more of the government budget for military purposes.
countries around the world. They find that foreign aid A recent analysis by Trisko Darden (2020) provides
does not affect investment or GDP growth. However, evidence, both through case studies and empirical
it does lead to a significant increase in household and analysis, for such an effect. The author finds that in
government consumption, which primarily takes the the year following an increase in U.S. foreign aid into a
form of increased imports of non-capital products. country, there is an increase in killings, repression, and
Thus, foreign aid does not fuel growth-promoting torture by the state. This is consistent with an earlier
investments (or growth itself ) but instead crowds out finding from Ahmed (2016), which shows that increased
domestic savings and increases consumption of foreign U.S. foreign aid is associated with greater repression
products. and human rights abuses in the recipient country.

One of the most important adverse consequences of While there is evidence that foreign aid can have adverse
foreign aid is its potential influence on conflict. There effect, it is not true that it always has such effects. For
are many accounts of foreign aid fueling conflict, such example, in contrast to the findings of Haushofer et al.
as the Nigeria-Biafra civil conflict of the late 1960s (2015), Egger, Haushofer, Miguel, Niehaus and Walker
(Barnett, 2011, pp. 133–147) or the post-Rwandan- (2019) find positive economic spillovers, not negative,
Genocide violence in the Eastern-DRC, which is still from a different UCT that was implemented by the same
persisting 25 years later (Terry, 2002, ch. 5; Lischer, organization, but in a different part of Kenya, giving a
2005, ch. 4). different amount, and using a different randomization
procedure. Nunn and Qian (2014) show that among
Numerous studies have formally tested for relationships the countries in their sample without a recent history
between foreign aid and conflict, using a range of of past conflict, food aid does not increase conflict.
identification strategies to obtain credible causal In a follow-up study that studies a conditional cash
estimates and many have found that foreign aid transfer program also in the Philippines, Crost, Felter
increases conflict. Nunn and Qian (2014) find this to and Johnson (2016) find that this aid package actually
be the case for U.S. food aid. Their analysis uses an IV decreased conflict. Trisko Darden (2020) finds that the
strategy where U.S. wheat production shocks, combined effect of U.S. aid on state killings and repression of its
with a country’s tendency to receive wheat aid from the citizens is weaker following the end of the Cold War.
U.S., are used to obtain exogenous variation in U.S. food
aid supply. Crost, Felter and Johnson (2014) use an RD The fact that the effects of foreign aid appear to be
strategy that exploits an eligibility cut-off for a World so variable raises the natural next question is how to
Bank-funded development program in the Philippines implement aid projects in a manner that minimizes
to estimate the effects of the program on conflict. They harm and maximizes overall benefit. A recent study
find that eligibility to participate in the program is by Moscona (2019) takes an important step in this
associated with more conflict, which appears to be due direction by estimating the heterogeneous effects of
to an increase in insurgent attacks against government the universe of World Bank lending projects from 1995–
forces in an attempt to disrupt the program. Dube 2014. He finds that the conflict-promoting effect of
and Naidu (2015) estimate the effects of military foreign aid is greater when projects are less successfully
aid in Colombia using a differences-in-differences implemented, which is measured by project quality
identification strategy. They find that U.S. military aid scores given by the World Bank Independent Evaluation
leads to an increase in conflict and violence arising due Group. Put simply, better-run aid projects generate less
to an increase in attacks by paramilitaries. conflict. According to the estimates, having the worst-
implemented aid projects results in more conflict
Others have argued that foreign aid is often channeled than having no aid project at all and having the best-
towards strengthening the government’s military, implemented aid projects results in less conflict than
particularly in autocratic regimes where stability having no aid project. These findings nicely sum up the
requires oppression and the use of force (Kono and message that has emerged from anecdotal examples and
Montinola, 2009). While it is unsurprising that military from the case-study literature (e.g., Anderson, 1999).
aid might have such an effect, this has actually been Foreign aid, if implemented successfully, can help.
found for economic aid. This occurs through the sale of However, if poorly implemented, foreign aid projects

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting 3

can actually make things worse. easy-to-collect, source of government revenue in a
setting where state capacity was still limited. Because
of multilateral tariff reductions due to the GATT/WTO,
tariffs have declined significantly around the world.
Other Options: Refrain from Developing nations have been forced to reduce their
Harming tariff restrictions to levels that are well below those
that currently-industrialized nations had at the same
Given the issues associated with foreign aid, the natural level of economic development. While this is clearly
question of whether other policy options are feasible economically beneficial for the world’s wealthiest
immediately comes to mind. I now turn to a discussion nations, it has been argued that they are effectively
of possible alternatives. “kicking away the ladder” of economic development
(Chang, 2002). Now that they have industrialized, they
A commonly used tool by countries has been trade and are not allowing developing countries to use the same
industrial policies. The underlying logic of the policies policy tools that they used to specialize in sophisticated
is motivated by the fact that there is a remarkably strong products, whose production is closely linked to
relationship between a country’s level of economic economic prosperity. Today’s developing nations are
development and what it produces (Hausman, Hwang also being prevented from using these policies to collect
and Rodrik, 2007). Without exception, countries scarce government revenue in settings where other
producing sophisticated high-end manufactures, like forms of taxation, such as income tax, is challenging or
automobiles and electronics, are relatively wealthy. impossible (Cage and Gadenne, 2018).
Given this relationship, many countries have taken
steps to promote production in these industries. Under current WTO rules, there are cases when
These include subsidies, low-interest loans, and countries can obtain exceptions and apply sizeable
tariff protection. Evidence is now accumulating that barriers against foreign producers. Antidumping duties
successful implementation of these policies can promote are one example of these. In theory, they are supposed
the level of production (and even the productivity) of to only be applied in cases where a foreign producer
these industries, helping to jump-start industrialization is engaging in ‘dumping’; namely, pricing goods below
and economic development. We now have evidence for cost in an effort to drive all competitors from the
the longer-run success of such policies, and their ability market, after which they will then engage in monopoly
to have macro-level growth effects, from 19th century pricing. In reality, anti-dumping duties have very little
France (Juhasz, 2018), late 19th and early 20th century to do with anti-competitiveness and everything to do
Canada (Harris, Keay and Lewis, 2015), late 20th century with traditional trade protection aimed at protecting
South Korea (Lane, 2017), post-WWII Italy (Giorcelli, domestic producers.
2019), and post WWII Finland (Mitrunen, 2019). Antidumping duties have proven to be an effective and
The evidence that industrial policy can jumpstart commonly-used tool. The duties applied are large, on
economic development appears compelling. While average 10–20 times higher (and as much as 100 times
the exact mechanisms remain to be fully understood, higher) than MFN tariffs. On average, the duties cause
knowledge externalities, learning by doing, increasing the value of imports to fall by 30–50%. Strikingly, this
returns, and endogenous factor accumulation appear to decline in imports is found even if a case is only filed
be important. An important open question is whether (i.e., initiated) but the duties themselves are never
the gains identified in the studies above are due to levied (Prusa, 2001). Thus, the threat of a duty only can
economic improvements, which are not zero-sum in have sizeable effects. Given this, it is not surprising that
nature, and which are due to a shifting of rents from at the same time that (standard) tariffs have declined
other countries. globally there has been a rise in anti-dumping duties.
This increase, which is shown in Figure 1, has been
If we look at the historical record, it is clear that today’s sizable and rapid, especially during the 1980s and 1990s.
industrialized countries relied heavily on industrial
policy with very high levels of tariffs and trade Since the initiation of antidumping duties requires
restrictions (Irwin, 2002, Clemens and Williamson, significant legal capacity, they are typically initiated by
2004). These tariffs were a particularly important, and wealthier countries and are often against less-developed

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting 4

Figure 1 Total number of new anti-dumping initiations and Figure 2 Relationship between net anti-dumping initiations
measures each year from 1978–2013. and average per capita GDP.

Total Anti−Dumping Initiations and Measures Difference Between Initiations By and Against vs GDP Per Capita

500
Total Initiations
350

Total Measures
USA
●

400
300

European Union
●

Initiations By − Initiations Against

300
Australia
250

Canada
India

200
●
Number of Cases

●
Argentina
200

●
South Africa
Brazil
● ●

100
Mexico
PakistanPeru
150

●
● ● Colombia Israel
New Zealand
● ●
Costa Rica Venezuela
●
Ecuador
Russia
Chile Malaysia
Indonesia ● ●
●● ● Japan

0
●
● Thailand ●
100

●
South Korea
●

−100
China
●
50

−200
0

0 5000 10000 15000 20000 25000 30000 35000

1978 1982 1986 1990 1994 1998 2002 2006 2010 GDP Per Capita (PPP)
Source: World Bank Anti−Dumping Database.
Note: Initiations include all cases, whether or not they are ultimately affirmed.
Source: World Bank Anti-Dumping Database.
Measures include those cases that are ultimately affirmed or partially affirmed. Source: World Bank Anti-Dumping Database.
Note: Initiations include all cases, whether or not they are Note: The correlation coefficient between the two variables is
ultimately affirmed. Measures include those cases that are ul- 0.55, which has a p-value of 0.004.
timately affirmed or partially affirmed.

countries. This is shown by Figure 2 which plot net real per capita incomes by 40%, it would be the closest
initiations (i.e., initiations by a country minus initiations thing we have to a panacea for economic development.
of other countries against the country from 1978–2013) However, we effectively have a policy intervention
and the country’s average income (measured in 1993). that does this, which is to not impose these policies
One observes a clear positive relationship. Countries which significantly harm developing countries. Thus,
initiating duties against others tend to be wealthier by removing the current practice, which is aimed at
while countries that have duties placed against their shifting rents from the less developed world, we could
products tend to be poorer. tangibly reduce poverty. By comparison, consider The
Millennium Villages Project, which was a high profile
While the aggregate effects of these duties on developing 10-year, multi-sector, rural development project, which
countries are not fully understood, we do have some began in 2005 in 14 village sites in ten countries (Mitchell,
evidence from one duty (of the hundreds of duties Gelman, Ross, Chen, Bari, Huynh, Harris, Sachs, Stuart,
that have been filed). This is for an anti-dumping duty Feller, Makela, Zaslavsky, McClellan, Ohemeng-Dapaah,
that was placed against Vietnamese catfish farmers Namakula, Palm and Sachs, 2004). This project, with its
by Mississippi catfish farmers in 2003. The effects on multimillion-dollar price tag, induced an improvement
Vietnamese households were studied by Brambilla, in income that pales in comparison to the benefit that
Porto and Tarozzi (2012). They find that for Vietnamese one would obtain by not initiating an antidumping
households that had specialized in catfish farming, petition against Catfish farmers in Vietnam.1
average annual real per capita income decreased by
40%. This is an enormous effect and much larger than Antidumping duties are but one of many example of
the size of any effect on incomes found for any form of actions that developed countries take to the detriment
foreign aid or any policy intervention. of less-developed countries. There are many more
examples. One that is closely related are tariffs and
If we were able to find an intervention that increased other trade restrictions more generally. There is ample

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting 5

evidence that, like anti-dumping duties, tariffs placed Figure 3 Total number of countries experiencing a
against developing-country products increase poverty, successful CIA intervention in each year.
reduce growth, and retard industrialization (e.g.,
McCaig, 2011, McCaig and Pavcnik, 2018). Despite this, CIA interventions by year

40
tariffs have, and continue to be, systematically higher
against goods that developing countries produce. They
are higher in less-skilled industries for which developing

30
countries have a comparative advantage (Nunn and

Number of countries
Trefler, 2013). Even within industries – i.e., at the
product level – there is a bias against poor countries.

20
Goods and varieties that are of lower quality, and tend
to be produced by less-developed countries, have higher

10
tariffs placed against them (Acosta and Cox, 2019).

Another example is the use of power and coercion in

0
the international arena. Several papers have found that 1950 1960 1970 1980 1990
Year
coercion has been used to benefit those with power (e.g.,
developed nations) at the expense of those without it Source: Berger, Easterly, Nunn and Satyanath (2013).
(e.g., less-developed nations). Berger, Easterly, Nunn and
Satyanath (2013) show that CIA interventions that led finding a market for.
to the installment of ‘puppet’ leaders who were aligned
with the United States, whether through propaganda, This form of foreign influence appears to be common
election support, organized coups, or assassinations, and important. Figures 3 and 4 provide data from Berger
resulted in an increase in power that was used to create et al. (2013) on the frequency of such events during the
an export market for U.S. products. After ‘puppet’ Cold War. Figure 3 shows the total number of ‘puppet’
leaders were installed, the sales of products from the leaders, who were installed and supported by the U.S.
U.S. to the intervened country increased dramatically, for each year of the Cold War, while Figure maps this for
while the sales of the intervened country’s products to each country. Among the 166 countries in their sample,
the United States did not change. The increased sales 51 were subject to at least one CIA intervention between
appear to have been due to the government purchasing 1947 and 1989 (and 25 countries were subject to at least
products that the United States was having a hard time one successful KGB intervention). In an average year

Figure 4 Map showing the fraction of years between 1947 and 1989 with a CIA intervention.

Years with US influence = 1

Proportion, 1947-1989
0-1%
1-10%
20-40%
40-60%
60-80%
80-100%
Not in sample

Source: Berger, Easterly, Nunn and Satyanath (2013).

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting 6

between 1947 and 1989, 25 countries were experiencing remittances would easily swamp foreign aid flows.
a CIA intervention and among the countries that
experienced an intervention between 1947 and 1989, the It is not only the families that benefit when an individual
average country experienced 21 years of interventions.2 migrates. Evidence is accumulating suggesting sending
countries can also benefit from out-migration. As
Other forms of international coercion have also Sanchez (2019) has documented, in the late-19th
been identified in the literature. There is now ample Century, particularly successful emigrants from Spain,
evidence showing that coercion can also work through often financed public goods and other large-scale
international organizations, such as the World Bank projects in their origin villages. Swedish emigration
or IMF. As an example, Dreher and Jensen (2007) find to the United States in the late-19th and early-20th
that the number of conditions on IMF loans is lower if Centuries led to higher unionization rates, more civic
a country is politically aligned with the United States. participation, and more inclusive domestic institutions
within Sweden (Karadja and Prawitz, 2019) as well as
Another example is restrictions on labor mobility. There greater innovation arising due to the resulting relative
is now accumulating evidence showing that there are scarcity of labor (Andersson, Karadja and Prawitz,
significant benefits to labor mobility. Not surprisingly, 2017). Emigration to the United States also led to more
numerous studies have found that those who migrate long-term inward and outward FDI for the sending
benefit. A recent study by Clemens, Montenegro and countries. Thus, international migration facilitated the
Pritchett (2019) carefully accounts for selection into creation of international business links that continue
migration to obtain credible estimates of the causal to exist today (Burchardi, Chaney and Hassan, 2019).
effects of migration. They find that for unskilled male Kerr (2008) finds that immigration to the United States
migrants with 9-12 years of education who move to the results in greater knowledge flows to the origin country,
United States, migrating increases their annual real which results in greater productivity and output.
wage by 395% or $13,600 dollars. This illustrates an
unsurprising but important fact: there is a remarkable The last group that also benefits from migration is the
increase in wellbeing for those who migrate. Also, if receiving country. Sequeira, Nunn and Qian (2020)
we presume that individuals are paid their marginal study immigration into the United States during its
product, then this reflects a nearly 400% increase in ‘Age of Mass Migration’. They find that immigrants
the migrant’s productivity from moving to the United generated sizeable economic benefits in the locations
States. in which they settled. These benefits were felt almost
immediately, persisted, and continue to be felt today.
For many, it is unsurprising that migrants themselves are Such effects have been found in many different cases,
better off after relocating. However, how could greater including the 17th Century Huguenot immigration
labor mobility be the basis of a serious development into Prussia (Hornung, 2014) to the large influx of
strategy? Won’t all developing countries empty and Vietnamese refugees into the United States beginning
currently-wealthy countries will become overcrowded? in the 1970s (Parsons and Vezina, 2018) to immigration
This line of thinking, which is commonly used to dismiss into France from 1995–2005 (Mitaritonna, Orefice and
attempts to increase the freedom of labor, ignores the Peri, 2017). Clemens, Lewis and Postel (2018) study the
fact that migration also makes developing countries – effects of the elimination of the Mexican bracero worker
i.e., those left behind – better off. In fact, this is why this agreement in 1964, a policy that resulted in the removal
might be such a powerful development tool. Evidence of nearly half a million seasonal Mexican farmworkers
shows that members of the extended family who are from the U.S. labor force. They find no evidence that
left behind are also made better off due to remittances domestic workers benefited from the exclusion, either
(Yang, 2008, 2011), which themselves cause increased in terms of higher wages or greater employment. Farm
human capital accumulation, less child labor, and more owners were forced to adjust to the scarcity of labor by
entrepreneurship and self-employment (Yang, 2008). shifting to labor-saving machines if such technology
Quantitatively, the flow of remittances is large. Despite existed. If they could not do this, then they were forced
the limited migration that occurs currently, they already to scale back production.
total more than aggregate aid flows (Yang, 2011). The
potential benefits from migration due to remittances Admittedly, a complete loosening of immigration
alone is large and with loosened migration restrictions restrictions may not be realistic in the near future.

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting 7

Figure 5 Visa restrictions faced
Figureby Ethiopians when traveling for
1: Visa restrictions to each
an country.
Ethiopian national

Ethiopia
No data
Visa Free
Visa upon arrival
Visa required

Source: Umana-Dajud (2019).

Source: Based on data from http://www.doyouneedvisa.com
However, the evidence also indicates that even small Conclusions
Note: This map shows short-stay visa requirements for Ethiopian citizens by destination country
reductions in the costs of (temporary) mobility can have
large effects. An example is restrictions on temporary In this brief, I have reflected on the current state
travelThere
visas, which
are twoare main
extremely stringent
reasons whyand onerous
visa of economic
restrictions might affectdevelopment.
international As trade
I havein discussed,
goods.
for travelers from many developing countries. Figure development policy tends to focus on interventions,
First, there is recent empirical evidence of the importance of face to face contact in interna-
5, which is taken from Umana-Dajud (2019), shows typically funded with foreign aid, that are aimed at
tional
the visa trade (e.g. facing
restrictions Cristea an (2011),
EthiopiansOxford Economics
who wants (2012),
fixing Startz
deficiencies (2017)). Visas
in developing might
countries. The thus
general
reduce
to travel international trade isbyshaded
abroad. Each country hindering or impeding
according to perception is that there are inherent problems or
the exports of firms whose managers with
restrictions
owners cannotan Ethiopian
travelfaces. Nearly every
to conduct country A
business. in survey
less-developed
conducted countries that can
by Oxford be fixed byshows
Economics with the
the
theworld requires agiven
importance visa totobein-person
obtained ahead of time.
meetings help when
by firms of the engaging
Western world. I have discussed
in exporting. Figureevidence
2 is
The handful of countries that allow a visa upon arrival that shows that the effects
taken from this survey. It shows the conversion rate from prospective customers to costumers of this ‘help’ can be mixed.
do not and
with actually have direct
without flights from
in-person Ethiopia
meetings. andresults
The the While
were there are benefits,
obtained using thethere can alsoto
answers beaunintended
survey
transit countries all require a visa beforehand. adverse consequences.
conducted among 300 executives and 500 business travelers. According to the obtained answers,
We
theseem to have of
percentage ended up in a strange
prospective equilibrium.
customers At theactual
who become same time that this
customers ‘help’ triples
nearly is being when
offered,anthe
With one hand,
in-person Western
meeting developed
takes place. nations are taking developed West undertakes many actions that are
actions that have obvious deleterious effects on harmful to developing countries in obvious ways.
developing countries. These decisions increase poverty Examples include tariffs, antidumping duties, limits on
and cause the persistence of underdevelopment. This international labor mobility, the use of international
occurs through trade policies, like tariffs or anti- power and coercion, and tied-aid used for export
dumping duties, and through practices in international promotion. These are but a few examples. Thus, it is
relations and political economy. With the other hand, unclear whether interactions with the West are, on the
we are trying (or at least purport to be trying) to help whole, helpful or detrimental to developing countries.
developing countries through foreign aid, which we We may have our largest and most positive effects on
know often has unintended negative consequences and alleviating global poverty if we focus on restraining
is typically given in a self-serving manner e.g., through ourselves from actively harming less-developed
tied-aid or aid given in-kind. It is likely that the very countries rather than focusing our efforts on fixing
best thing that we as the West could do is to not take them.
these actions that are causing harm. That is, we don’t
need to “fix” anything. Instead, we could simply stop
harming developing countries. Nathan Nunn is Frederic E. Abbe Professor of Economics
at Harvard University, Department of Economics. Contact:
[email protected]

Economists for Inclusive Prosperity | Restraining Ourselves: Helping by Not Hurting 8

Endnotes
* For helpful comments and discussions, I thank Grieve Chelwa, Sahana Ghosh, Joseph Henrich, Jacob Moscona, Suresh
Naidu, James Robinson, and Jessica Trisko Darden. I also thank Lydia Cox and Aditi Chitkara for excellent research assistance.
Some of the arguments presented in this article can also be found in Nunn (2020).
1 All this is not to say that the current system could not be better designed to improve global inequality. For one such pro-
posal see the recent brief in this series by Dani Rodrik (2018).
2 It is clear that such forms of international coercion are not a post-WWII phenomenon. There is a long history of economic
coercion. Examples include the unequal treaties imposed by Western powers on China and Japan during the 19th and early 20th
centuries (Findlay and O’Rouke, 2007).

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