On EA and institutions

Poor countries suffer from poor institutions

It is widely understood that many developing nations suffer from problems that are largely a result of poor institutions. ¹

By institutions here, I’m mainly talking about: a. Political institutions: Systems that determine how power is obtained and exercised. Some effective forms of this include: free and fair electoral systems, independent judiciaries and legislatures, term limits, freedom of press, anti-corruption bodies/commissions

b. Economic institutions: Systems that affect how wealth is created, shared and protected. Some of these include: property rights, financial systems

These institutions should be designed to help people get themselves out of debt cycles by providing them with access to basic needs. By basic needs here I mean stuff they need to survive, and not have to pay a heavy premium to access (which would make them poorer) like clean running water, cheap nutritious food and cheap and reliable healthcare. Often, these needs are best met via government provision.

Support good leaders

Institutions are built by governments, and governments are ran by leaders. I think it would make sense to spend more on founding and supporting PACs (Political Action Committees) for candidates who actually have good interests for the country in question. Campaign strength is a good proxy for election results; and strong campaigns require a lot of funding. In many democratic poor countries, elections simply often go to the highest bidder. ² Also, It is often not hard to identify these candidates as they usually have the popular vote. Citizens are usually generally aware of which candidates actually have their best interests at heart and know who the bad guys are ³

Good leaders can definitely save poor countries; and there is a lot of evidence supporting this claim. Singapore is perhaps the most extreme example, but countries like Botswana and Rwanda have achieved more reasonable, reproducible growth rates too.

Now you might ask: Why should I (a foreigner) meddle with the affairs of other countries that I have nothing to do with? Isn’t that just neo-colonialism with extra steps? And to that I answer: You should meddle because you want to help, and this is the most effective way to do it.

One thing about EAs is that they are focused on seeing the direct results of they’re collective actions. If they raised $1 million last month, they want to see pictures of 10,000 different people with $100 in their hands. Now, institutional change doesn’t necessarily work like that. It is more of a slow, long-winded progression of results. But I’d argue that it is not terribly difficult to quantify. For instance, if you manage to help get a (for the purposes of simplicity) good leader elected, you could measure improvements in the quality of life of the population over time via surveys⁴

EA-funded VC firm

I would argue that another way donations could help would be via giving startups/early stage companies access to credit. Venture capital does not have much of a presence in most African countries because of the risky nature of business in these countries. If foreign VC ends up finding its way into a country’s startup scene, it is often given to foreigners who usually do not understand the problem they’re trying to solve or the market ⁵. Banks haven’t been particularly good with this either because of problems like collateral requirements ⁶ and poor credit infrastructure ⁷

Since you can’t really solve all problems faced by poor people, you’re better off helping the ones who will do the max good for the future of the nation, even if they happen to profit from it. Isn’t that what (all hail) capitalism is about anyways? So far, It’s been a net good for society ⁸ Funding such startups will generate more economic output via jobs (youth unemployment rate in some countries is as high as 67%!⁹) , taxes paid and overall increased GDP.

I’m not implying that you should stop buying mosquito nets for the less fortunate. Charity organizations have their place and have directly saved a lot of lives via buying and administering vaccines populations that would’ve otherwise foregone them, UTCs and many more goodwill devices. My proposals are intended to supplement the excellent work EA already does.

I also don’t want to give the illusion that I have all the answers. I put this up to open up some discourse and update my models on this topic. Feel free to send me your feedback.