My entire point was that the problem cannot be fixed in this way. Pouring money into a region that doesn't have a functioning economy doesn't create an economy, in fact it may even make a self-sustainable economy impossible. Meanwhile, it takes money out of an economy that is functioning which amounts to a net loss to world productivity.
This is a fairly common and important criticism of aid; it is part of the hypothesis of Dambisa Moyo. Whilst a valid criticism against certain types of aid, it certainly does not apply to all of them. For example, public health interventions such as increased vaccinations, or combating infectious diseases, require little in the way of a local functioning economy. Furthermore, such items are generally considered to be both quasi-public goods (due to herd immunity) and merit goods -- so, there is a strong economic argument that they will be under provisioned...
I'd be really interested to hear what the Less Wrong community thinks of this. Don't spoil it by reading the comments first.
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