To follow up my comment about the real value of the Peace Corps cited by John Coyne at this site, I would emphasize that the real vehicle for economic development is the global economy, not development aid.  “Trade, not aid,” is real.  Unfortunately the ”global economy” has many critics from the Tea Party on the right to the ultra-leftists.  But it is the way for poor countries to climb the world’s economic ladder.

Of course the prime example is China.   The Chinese had to shuck their autarkic, communist, inward looking economy to jumping whole hog into the rough waters of international trade and investment.  The move proved more beneficial than their wildest expectations.  They converted a backward, poor country subject to periodic famines into the second largest economy in the world. 

The trade surpluses and inflow of investment funds proved far more useful than development assistance in improving the economic lot of China, as well as India, South Korea, Brazil, Mexico, Turkey and all the rest of the “emerging markets.”  These surpluses and net inflows of investment funds represent a massive transfer of assets from the “have” countries to the “have-nots,” that would never come from development assistance. 

Perhaps the first example of this came in the 1970s when the major oil producing countries seized their oil fields from the concession holders and dramatically raised the prices for their products.  This massive transfer of wealth from the “rich” to the “poor” countries represented the largest such transfer in history, e.g. the Huns sacking ancient Rome.

And the Chinese move did not come easily, it had to convert an autarkic, communist, inward looking economy into a quasi-capitalist one dedicated to cashing in on the “global economy.”  Nor was it any easier for India or Brazil or Mexico.  They had to accept charges of submitting to “economic imperialism” in forming close bonds with the “rich” countries.  

I saw the enormous possibilities of the “global economy” as a teenager and spent my college years learning all about it.  Since then I have worked to promote the “global economy.”  I even wrote the first study in the State Department on the potential for Chinese trade after breaking through the “bamboo curtain.” Using an algorithm that I created I predicted Chinese trade that proved to be very accurate. 

“Trade, not aid” is the way to economic development.  Thus I have always cautioned against casting the Peace Corps as a “development” agency.  Its value has always been image building and cross-cultural understanding.  

Indeed, I would even suggest that our USAID has more value for image building than actually delivering economic development.  I would not place the World Bank or the IMF in this category.  Rather they are instruments that facilitate growth in the “global economy” that in turn allows for development via international trade and investment. 

While John and I agree that the lasting contribution of the Peace Corps is the strong bonds of friendship that improve cross cultural understanding, I believe that the Peace Corps itself has lost sight of this reality.  It functions as though it were a “mini-USAID” focusing on how many latrines it builds, rather than how many friendships it creates.