Living in the Third World

Living and working a third world country has really helped me understand why countries remain third world countries.  I used to think with enough aid, investment, and assistance from first world nations, third world nations could become economically viable and lift the living standards of their citizens.  I no longer believe this.  It's just throwing money away.

Here are some examples as to why:

1)  The Road That Never Was.  To effectively mine, produce palm oil, or grow food, a company needs to have exclusive usage rights to the appropriate land.  Currently, in Indonesia, there is a project underway to build a road on land owned by such an entity.  When the company that owns the land objected to the project, the local government officials, after admitting that the road should not be built, said the project must continue because the money was budgeted for 2010 and is already spent.  Their solution?  After the road is finished, they'll shut it down and let the jungle grow over it again.  Who do you think has the contracts with the government to build the road?  Friends of the governor.

2)  The Hand Never Disappears.  Anyone wanting to understand why companies (that are not the Chinese government) shy away from doing business in third world countries need only look at what just happened to First Quantum in the Democratic Republic of Congo.  The DRC is not alone in their shady business practices.  In Indonesia, every natural resource company is having their Contract of Work (COW) reviewed and, in some cases, renegotiated.  It seems like every other week, the government is levying new taxes against the natural resource companies that operate here.  The business environment is not stable and the government cut of the operations increases every year - to 100%, in the case of the DRC.  The hand is always out hoping to be padded with more money.

3)  Graft.  In Indonesia, the Jakarta Chief of Police was recently reported to have over $1 million USD in a bank account.  He has a base salary of $30,000 USD per year.  The newspaper the broke the story was fire-bombed the day after they published the report.  No investigation of the bombing occurred.  Other companies report issues of bureaucrats denying or delaying permits either to extract a 'fee', or because they lost money on a business deal that ended up favoring the company now seeking a permit.  A fully-funded monorail system in Jakarta has nothing to show for the tens of millions of dollars spent other than concrete pillars partially finished down the main street.  All the money dried up three months into the project, after several government ministers built new homes.  If you are sending money to a third world nation, you are really just funding the next car, house, or vacation of the bureaucrat between your donation and the intended recipient.

The IMF, World Bank, and NGO's really should just stop involving themselves in developing nations that are unable to demonstrate gubernatorial competency.  Otherwise, it's just good money after bad.