BOOKS: ‘Dead Aid’

DEAD AID: WHY AID IS NOT WORKING AND HOW THERE IS A BETTER WAY FOR AFRICA
By Dambisa Moyo
Farrar Straus Giroux, $24, 188 pages
REVIEWED BY DOUG BANDOW

Africa is a land of tragedy and hope. A continent of poverty and conflict. Filled with entrepreneurial people seeking the same opportunities as the rest of us.

Our moral duty to aid others in need is strong, but good intentions are not enough. In her new book challenging the efficacy of foreign aid, Zambian economist Dambisa Moyo writes that surely one would expect Western moralizers to adopt policies which help those in need rather than hinder them in the long run and keep them in a perilous state of economic despair.

Tragically, the Western moralizers to whom Ms. Moyo refers have done precisely the latter. Not intentionally, of course. But, Ms. Moyo argues, the $2 trillion in foreign aid to the Third World, much of it to Africa, has been not just ineffective, but counterproductive. Only by ending aid will the West give poor countries the chance to develop.

Dead Aid is a blockbuster. Not because its arguments are new. In fact, Ms. Moyo dedicates the volume to Peter Bauer, the late British economist who almost single-handedly challenged the foreign aid establishment decades ago. He wrote eloquently and often, setting the stage for Ms. Moyo. She also cites more recent critics, former World Bank economist William Easterly and Oxford economist Paul Collier.

What makes the book particularly important is Ms. Moyo. Born in Zambia, a consultant to the World Bank and a specialist in sub-Saharan Africa for Goldman Sachs, Ms. Moyo makes an African case against so-called foreign assistance. She has the credibility to challenge glamour aid and how campaigning for more Western money paved [the way] for the army of moral campaigners &8212; the pop stars, the movie stars, new philanthropists and even Pope John Paul II &8212; to carve out niches for themselves.

But her strongest objection is not to celebrity hypocrisy. It is to the negative impact of so-called aid to Third World governments.

Many excuses have been offered for the failure of poor countries to develop: colonialism, geography, culture and more.

While each of these factors may be part of the explanation in differing degrees, in different countries, for the most part African countries have one thing in common &8212; they all depend on aid, Ms. Moyo writes.

Foreign assistance has consistently failed to spark economic growth, she adds.

Individual projects might appear to work, but A short-term efficacious intervention may have few discernible, sustainable long-term benefits. Worse still, it can unintentionally undermine whatever fragile chance for sustainable development may already be in play, she explains.

Independent studies, many by development institutions, long have documented how foreign aid really isn’t aid. Sophisticated econometric analyses aren’t required, though. Ms. Moyo observes: Even the most cursory look at data suggests that as aid has increased over time, Africa’s growth has decreased with an accompanying higher incidence of poverty. Over the past thirty years, the most aid-dependent countries have exhibited growth rates averaging minus 0.2 per cent per annum.

Ms. Moyo contends that foreign assistance leaves recipients, like her home country, worse off. Bad policy by bad governments is the biggest obstacle to development, yet aid makes this problem far worse. Indeed, destructive dictators such as Zaire’s Mobutu Sese Seko and Zimbabwe’s Robert Mugabe might have disappeared years earlier absent abundant aid from abroad.

Ms. Moyo adds: With aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments &8212; providing them with freely usable cash. These corrupt governments interfere with the rule of law, the establishment of transparent civil institutions and the protection of civil liberties, making both domestic and foreign investment in poor countries unattractive. Greater opacity and fewer investments reduce economic growth, which leads to fewer job opportunities and increasing poverty levels. In response to growing poverty, donors give more aid, which continues the downward spiral of poverty.

This is the vicious cycle of aid. The cycle that chokes off desperately needed investment, instills a culture of dependency, and facilitates rampant and systematic corruption, all with deleterious consequences for growth. The cycle that, in fact, perpetuates underdevelopment, and guarantees economic failure in the poorest aid-dependent countries.

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