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Department for International Development (DfID) releases a new economic development strategy

Tom White

11th February 2017

The international development secretary has released what is billed as DfID’s first ever economic development strategy.

According to The Economist, poverty can be tackled in many ways, from deworming children to advising poor countries on their tax systems. DfID does the lot. From now on it will focus more intently on encouraging business growth in the poor world—particularly the kind of business that creates lots of jobs. Parliament has already passed a bill that will allow DfID to funnel £6bn into Britain’s development finance arm, known as CDC, which invests in African and South Asian firms—up from £1.5bn today.

Although DfID is charged with tackling poverty and nothing besides, it hopes that today’s recipients of aid might be tomorrow’s trading partners. According to the Overseas Development Institute, development finance seems to boost growth more than conventional aid does , per pound spent. Other countries and international outfits have piled so enthusiastically into development finance that it has grown from about $10bn in 2000 to $65bn in 2014.

But the authors argue that what would really help is a combination of financing and freer trade. The EU already allows poor countries tariff-free access to its goods markets under a scheme called Everything But Arms. Britain could be even more generous—for example, by adopting looser country-of-origin standards, which would allow poor countries to export goods tariff-free even if they added only a small part of the value. On the other hand it could be more restrictive than the EU. Nobody knows, nor will anybody find out soon. The priority is a trade deal with the EU, then big markets like America. Malawi is far down the list.

However, the notion that economic development will deter people from migrating to Britain is almost certainly wrong. The very poorest seldom migrate. Research suggests that emigration rises as countries become wealthier, until income per head reaches about $7,000-8,000 at purchasing-power parity (that is, until a country is as wealthy as the Philippines). Only then does higher income lead to less emigration. Because DfID tends to deal with poorer countries than that, success is likely to bring more migrants, not fewer.


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