Book-Blogging: Dead Aid – Chapter Three

This is part of my effort to read through a number of development-focused books. Previous chapters of Dead Aid: one, two

Big claims abound in this chapter, but the evidence to back them up is sometimes lacking. Moyo begins by giving an overview of the prevailing theories to account for the African continent’s “failure to thrive;” these range from Jared Diamond’s geographical explanation to one that relies on its unique history (colonization, poorly-constructed borders, etc.) and others. Wisely, she concludes that,

 “Africa’s failure to generate any meaningful or sustainable long-run growth must, ostensibly, be a confluence of factors: geographical, historical, cultural, tribal, and institutional”

Which would seem to argue for the idea that aid is not the proximate cause for the meager economic growth in some of the countries in Africa; aid may play a part, but the cause is too multi-factorial to blame it in isolation.

As it turns out, there are a number of examples of “aid” working, but Moyo argues that they are either singular events that can’t scale to today’s crises (e.g., the Marshall Plan) or that the successes weren’t due to aid; regarding Botswana, Moyo says that it did

“receive significant foreign assistance (nearly 20 percent of the country’s national income) in the 1960s… crucially, by 2000, Botswana’s aid share of national income stood at a mere 1.6 percent, a shadow of the proportion it commands in much of Africa today. Botswana succeeded by ceasing to depend on aid.”

Let’s unpack that a bit, as I think it says a lot about the way Moyo argues her contentions. Here’s how this argument plays out: 1) a country receives a significant amount of foreign aid; 2) later, that same country receives a substantially smaller amount; so 3) that country succeeded by ceasing to depend on aid. The obvious question is this: why not conclude the exact opposite as Moyo, and say that the country succeeded in part due to foreign aid, and as a result needed less aid? There doesn’t seem to be a causal link between Moyo’s conclusion and the supporting facts; the best argument supporting hers is that Botswana’s institutions improved and expanded in spite of foreign aid, not because of it – but Moyo doesn’t make this argument, and I struggled to find evidence that backed up this claim.

Another blanket statement follows: “Aid supporters also believe in conditionalities,” as if everyone who supports foreign aid unconditionally supports any type of tie to aid. Not only is this not true – there are myriad examples of untied aid – it’s outdated by a decade or two. Structural adjustment programs were tried – and many would say they failed to produce the outcomes they were designed to facilitate, full stop. There are certainly political constraints tying aid to specific projects and using foreign citizens/goods to build and facilitate projects – and these are real issues that need to be addressed! – but it’s a complete straw argument to say that all aid supporters are pro-conditionality.

Next up: democracy – is it good for economic growth and is it good for many in the developing world? I think Moyo is right to be skeptical that democracy is good for economic growth at all times, though I’m wary to support her idea that

“…what poor countries at the lowest rungs of economic development need is not a multi-party democracy, but in fact a decisive benevolent dictator to push through the reforms required to get the economy moving”

The problem – as Moyo acknowledges – is that the benevolent dictator rarely stays benevolent, and even when he/she does, when he/she dies, who will ensure another benevolent leader emerges? I don’t think Moyo does her argument many favors when she holds up Pinochet as an example of one such leader, either. This is a tough question, to be sure – looking at the Communist Party rule in China, there’s a debate to be had whether or not the “right” type of autocracy is able to engender the types of reforms and to start the infrastructure projects necessary for continued economic growth. I’m just not all of the way there yet.

There’s also the argument that democracy is a good thing in and of itself – even if it slows (immediate) growth. This is a decidedly-unpopular argument to make, but I think there’s a case to be made for it. In my opinion, a democratic society where the smaller gains are shared relatively more equally would compare favorably with a less-than-democratic country in which the larger gains are shared only amongst the few and not the many. Of course, this is an especially stylized example, but one that hopefully serves to get the point across.

Towards the end of the chapter, Moyo quietly makes the case for “smart” aid – funding the right types of initiatives, in the right way. Singled out are initiatives to use funding to buy African goods – food, bednets, etc. It’s hard to disagree with this point; aid funding is here to stay, so put it to the best use! This was my takeaway from The White Man’s Burden, actually – if you believe “Big Push” aid funding is not beneficial, then find another way; don’t scrap it altogether.

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