Question

Imagine that a poor country, Poorland, wants development assistance and has applied for two development projects to a donor country, Richland, for possible financing. The two projects are: a) subsidizing unskilled labour migration from Poorland to Richland, and b) subsidizing food for works program in Poorland. Richland knows that the government of Poorland could be corrupt. Based on this, if Richland wants to finance one project out of two, which one should it finance, and why?

Answer 1

As mentioned in the question, Portland is a corrupt country then if Richland wants to invest in food for work program then the resources invested for providing jobs can be misused. Even grains production required for the poor population will go in the wrong hands. The basic purpose of food for work program is to raise the standard of living of poors.Thus various schemes in the form of investment will be required by Richland in order to provide employment to the poor section so that their income will be increased. It can be done by generating work. But if Richland will be ready to finance for the program then Poorland government may misuse the financed amount . And it will not be helpful to generate employment or provision of food requirements will not be fulfilled. On the other hand, if unskilled workers may be migrated to Richland at subsidized rates then by investing in the project, proper training facilities can be given to the workers. It will help to generate employment. Thus they will be able to earn to run their livelihood. As they will receive low wages then they are provided with various benefits from the public treasury. Proper training may be helpful to get better jobs in the near future as well.Thus the investment in the project will be fruitful for the poor unskilled workers.And in the second project due to corrupt government, it might happen that the funded amount will not reach the poor section.