[ Question ]

Does anti-malaria charity destroy the local anti-malaria industry?

by Viliam 10mo5th Jan 20191 min read16 comments

64


The usual argument against foreign aid to Africa is that randomly giving tons of free goods (such as food) ruins local producers; and when at some later moment the charity goes out of fashion (or decides to target a different part of Africa), the local situation becomes even worse than before, because the local producers have gone out of business. In addition, it hurts the local people psychologically to know that any local business, no matter how successful it could otherwise have been, can at any moment be destroyed by a well-meaning foreign charity.

Recently I heard the same argument made about anti-malaria nets recommended by GiveWell. If I understand it correctly, the donated nets put local net producers out of business (increasing local poverty and dependence on foreign aid), and the estimated number of lives saved is misleading (because in the alternative scenario, the same people could have been saved by locally produced nets).

I have one specific question, and one more general concern.

The specific question... well, I know nothing about the anti-malaria industry in Africa. It exists, I assume. But quantitatively -- how many nets it produces, how many nets it stops producing because it is pushed out of the market by GiveWell, whether the nets are of comparable quality, what is the best estimate of the scenario with no foreign aid compared to the scenario with foreign aid -- I have no idea. I supposed some of this was already discussed by some effective altruists, so I would love to hear the summary.

The meta concern is the following: I find the argument of foreign goods disrupting local market plausible. But seems to me that the problem is with high variance (one year a ton of goods, the very next year nothing), not with foreign goods per se. Because, anytime a country participates in foreign trade, the local producers of the stuff that is being imported, are pushed out of business. But we have the law of comparative advantages saying that in global, this is a good thing, for both countries. (Or to put it differently, trade sanctions are typically used as a punishment, not as a reward.) I worry that at some moment, the "stop destroying African economy by your disruptive aid" argument becomes effectively "stop trading with Africa", and I am not sure where exactly to draw that line.

64

New Answer
Ask Related Question
New Comment
Write here. Select text for formatting options.
We support LaTeX: Cmd-4 for inline, Cmd-M for block-level (Ctrl on Windows).
You can switch between rich text and markdown in your user settings.

2 Answers

While not comprehensively covered, GiveWell mentions this in a few places. The second point here links to a report with this section discussing whether people are willing to pay for nets, as well as a link to this old blog post which briefly makes the argument that people won't buy their own nets, since previous hand-outs (from other charities) have resulted in a lack of local producers and an expectation of free nets. They also mention that nets have some positive externalities, and mostly benefits children, who aren't the ones paying, which gives some reason to subsidize them.

I don't know anything about the particular case of net production. I think that the general argument against aid is similar to the typical argument for protectionism, which I think is something like:

  • Local production creates local infrastructure, know-how, human capital, etc.
  • Over the long run this benefits the region much more than it benefits the producers or consumers themselves.
  • So the state has reason to subsidize local production / tax imports.

If you have usual econ 101 models (including rational expectations), then variability itself doesn't cause any trouble, the only problem is from these positive externalities. These externalities could be pretty big, it's plausible to me that they are much larger than the direct benefits to producers and consumers.