Can Hedge Funds Transform the Developing World ?

Can Hedge Funds Transform the Developing World ? 5.00/5 (100.00%) 1 vote

attract direct investmentMore often than not, the priorities for the developing world always center on the need to attract investment. Governments are advised that the only way that they can move their people from a position of dependency and inadequacy is to attract as much investment as possible. Given the fact that the hedge fund is in effect a pool of investment capital, the assumption would be that any self respecting developing country would be looking to ensure that they can attract as much hedge fund investment as possible.

Unfortunately this is not always the case. Hedge funds can be notoriously unreliable and will not always have the interests of the common people within the community at heart. Their aims are always similar to all business and that is to make as much profit as possible with as little risk as possible.

The desperation among some developing countries means that they are willing to try almost any financial scheme that promises to alleviate the long term suffering of their people. A lot of experts from the International Monetary Fund will only be too happy to lecture them about economic policy and in many instances will insist that the government should stop taking the interests of its people as a priority. The priority for them is economic development at all costs. The local people can get stuffed. This attitude causes lots of resentment among people who would normally consider the merits of the hedge fund before making a final judgment.

A Broken System
economic developmentLet us assume that the investment is attracted and the hedge fund has been allowed to operate smoothly within the local community. What then? No matter how much money a government has obtained from whatever hedge fund, if they do not have the skills and presence of mind to use that money the people will never see any development.

A lot of developing countries have been deliberately kept behind in order to ensure that they will always be a market for manufactured goods from the developed world. A great deal of trade barriers have been allowed to fester over time meaning that even the most basic economic activity is remotely controlled. To assume that the mere presence of a hedge fund can overcome these problems is not only short sighted but fails to acknowledge the role of the developed world in the economic problems of the developing world.

The blame does not just lie with the rich foreign super powers but also the domestic governments which seem to encourage rampant corruption. All the money that will come from the hedge fund will end up in the pockets of some big shots. What is particularly annoying is that some rich developed countries have decided that the way to help poor people is by getting leaders to participate in corruption and assisting in the safe storage of this ill gotten wealth.

It therefore seems to me that the hedge fund as a source of development aid is nothing but a smoke screen to hide the multiplicity of the failings of developing governments.