It was a treat to see Jane Goodall during her recent visit to Bozeman. Dr. Goodall’s path-breaking research with chimpanzees was done on the Gombe Stream Reserve, now a small national park in western Tanzania. Dr. Goodall told her Bozeman audience that the park (and its chimpanzees) face serious threats as local residents clear the surrounding forest for firewood and to plant crops. Goodall understands that poverty is the root cause of this problem. To help, Goodall has launched an economic development program for the communities surrounding the park. Its goal is to foster economic progress and stop the degradation of the area’s natural resources.

This got me thinking about keys to economic progress. All developed countries began as undeveloped. The question then, is not why are some nations poor, but rather, why are some nations rich? Is it abundant natural resources, access to outside capital, geography, climate, or luck?

Many popular books explore this issue. (I recommend Jared Diamond’s Guns, Germs, and Steel.) One of my favorites is a short collection of essays, From Subsistence to Exchange, by the late development economist Peter Bauer.

Bauer spent a lifetime studying economic progress in the poorest nations of the world. He sought to understand what lead a nation to the path of prosperity. Bauer was among the first to challenge the view that developing countries could only make progress through centralized economic planning, protectionist trade policies, and state-led investment. He also challenged the notion that foreign aid was the only way to break the “vicious cycle of poverty.” Bauer insisted that, trade, not aid, was one of the keys to development.

Bauer noted that forty years ago many Asian countries were among the poorest in the world. He asked, “How was it that South Korea and Singapore, nations that received little, if any, outside assistance, have moved from African-level poverty to European-level prosperity?” What they held in common was their successful engagement with the world trading system. The results have been extraordinary. In 1960, South Korea was as poor as India. Today its per capita income is 20 times higher.

Sub-Saharan African countries, where aid constitutes over 10 per cent of GNP, remain the poorest in the world. Countries with some success in combating poverty, such as India and China, depend little on aid (less than 1 percent of GNP in both countries).

Bauer’s view on aid can be summed up in this typically blunt sentence: “Government-to-government transfers...are an excellent method for transferring money from poor people in rich countries to rich people in poor countries.”

Trade is the most powerful economic development tool known. The notion, often advanced by self-serving political elites and naïve NGOs, that nations should strive for self-sufficiency and shun trade is a pernicious lie. Alan Kyerematen, Ghana’s former minister of trade, said, “It is no longer a contentious issue that trade is one of the most important tools for expanding growth in the global economy—thereby enhancing the well-being of the people of this world.”

To Bauer, Africa is not fatally flawed. “Despotism and kleptocracy do not inhere in the nature of African cultures,” he wrote. Such an assumption was, to him, racist. Yet he believed this is was the assumption behind foreign aid.

To achieve further economic gains African nations must join the global economy. They must cut tariffs. And America and Europe must reduce trade barriers and buy the products that Africa can produce competitively. This includes not only agricultural products, but also labor-intensive goods such as textiles. U.S. protectionism is particularly galling for those countries that have tried to make market reforms work, only to see their producers undercut by subsidized goods in the “free” market.

Peter Bauer believed that economic progress “depends on personal, cultural, and political factors, on peoples’ aptitudes, attitudes, motivations, and social and political institutions.” Dr. Goodall’s work shows the people living near Gombe are willing. I wonder if the world’s governments are?