Beyonce’s Secret for Greater Aid Effectiveness
William Easterly
Aid Watch Blog, September 1, 2009
One of the oldest ideas in economics is gains from specialization. Adam Smith talked about it 233 years ago. All of us are good at a small number of things and suck at most everything else. The economy as a whole produces more because we each specialize in what we do best and then trade with everyone else.
beyonce-performing-3.pngWe see Beyoncé specializing in music videos, which she trades to Bill Gates for his specialized production of software. We will get more of both music videos and software from Beyoncé and Gates than if each (without the possibility of trade) had been forced to supply their own needs for software and music videos.
Beyoncé would be forced to take time away from videos to try to figure out her own software, and Gates would have to divert time from software to learning how to sing and dance in a swimsuit.
bill-gates-picture-2.png
Economists are often congratulated for their impressive grasp of the obvious. Yet if this principle is so obvious, why is it routinely violated in the aid world? It’s gotten worse with the Millennium Development Goals. Each aid organization tries to meet all MDGs and each fails to specialize. Therefore some aid agencies are forced to supply things they are bad at – the equivalent of Gates’ music videos – for which there is no demand.
