We sometimes see similar localized effects when wealthy foreign governments and NGOs go into poor countries to "help" with foreign aid and investment. When done correctly this can boost the local economy in a sustainable way, kind of priming the pump. But often it just dumps a lot of cash in, causing price inflation as the supply of goods and services fails to keep pace with the supply of money.
Outside influence heavily distorts local economies and needs to be done extremely carefully or you end up making a few people rich and starving everybody else.
Heifer International presents a good face on doing this by introducing livestock, providing education to the new owners, and imparting an in-kind donation requirement so as to perpetuate and spread the gains.
Likewise charities that build clean water infrastructure, small scale solar, cell phone infrastructure, insulated cooking pots to reduce fuel use, and build infrastructure and training for basic medical care – these are all things that support increases in productivity by removing barriers and introducing efficiency into people's lives enabling them to do more, for their children to attend more school, for them to lose less time to illness and malnutrition.
Where just giving away food or money, especially on large scales distorts and ruins economies. Likewise introducing significant export markets when a local economy isn't ready.
> Early data from a sub-district pilot showed sharp reductions in extreme poverty and improved wellbeing with minimal inflation, showing direct cash is a scalable tool to accelerating the end of extreme poverty.
That is an organization judging it's own success while a program is accelerating.
And if you measure poverty by how much money someone has and then give them money saying you've fixed poverty is tautology.
If your plan is to build a client state on perpetual welfare, well sure it's easy to be successful. But you can never leave and it's very possible that if you do leave things will be worse than if you had done nothing at all.
Whereas if you distribute a bunch of goats and chickens among a community and spread some education about raising goats and chickens, there's a good chance you've made a one shot permanent improvement to the quality of life of a community.
The criticism for giving direct aid in food and cash isn't that things are worse for the people you're giving them to while you're giving it to them... it's that you wreck the local economy for food and everything else because nobody can sell food when food is free and you can't price things correctly when money is pouring in. The money always stops and the aftermath is a disaster.
