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bogus comments on Charity Effectiveness and Third-World Economics - Less Wrong
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Comments (37)
What do you mean by "money" here? Local currency? They bought that currency in the foreign exchange market, so no, there's no injection of cash into the broader economy. The only issue I can think of is that spending a lot of money (here meaning generally "resources") in a very localized area might drive up local prices (i.e. land, local wages etc.) compared to the surroundings, making the locals not as much better off in PPP (purchasing-power parity) terms. But this is going to be negligible in a typical intervention.
Who would have otherwise bought that currency in the foreign exchange market? Where would they have spent it? Are higher prices on the foreign exchange market a good thing?