Development economist Peter Bauer died on May 2, shortly after it was announced he was the first recipient of the $500,000 Milton Friedman Prize for Advancing Liberty.
He did his most important work during the immediate post-war era, in which the intellectual climate favoured government planning. In Europe, virtually all countries adopted highly centralised economic policies, including widespread nationalisation of industry. Many of them, such as France and Great Britain, exported these ideas to their colonies, where they continued after independence.
Concerns about Communism led western nations to initiate huge foreign aid programmes. Aid was available for projects favoured by development economists and denied to countries that insisted on going their own way cementing government planning as the dominant approach to development.
Bauer studied the rubber industry in Malaya and trade in West Africa. His very detailed field research ran sharply counter to the teachings of development economics.
Bauer argued that all these countries had to do was let the market, rather than government, guide development. The fact that most LDCs are poorer today than they were at independence is sufficient proof that the post-war central planning consensus was terribly wrong.
Source: Bruce Bartlett, senior fellow, National Centre for Policy Analysis, May 8, 2002.
For text http://www.ncpa.org/edo/bb/2002/bb050802.html
For more on Foreign Aid http://www.ncpa.org/iss/int
FMF Policy Bulletin\14 May 2002
