Thoughts on Dead Aid?

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Thoughts on Dead Aid?

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1zebedeejr
Maio 13, 2010, 9:36am

Any of you read the recent work Dead Aid by Dambisa Moyo? The second half gets a bit technical if you're not in the development or finance field, but the work provides a provocative view of how to really help post-colonial Africa develop in the opinion of an African instead of a Western professor.

2madknitta
Maio 13, 2010, 9:53am

I wasn't particularly impressed with Dead Aid. I thought the first half was overly redundant of previous aid critiques (see, for example, Hancock's Lords of Poverty, Maren's The Road to Hell, and de Waal's Famine Crimes). The second half cloaked itself in technical jargon but was theoretically weak. Yes, Africa will benefit in the short-term from intensive capital input from China. But part of the reason that Africa is in the state that it's in today is that during the Cold War, the US and Russia pumped huge amounts of cash into African states without asking a whole lot of questions, resulting in the propping up of brutal and corrupt regimes. And Moyo fails to address the facts that (1) China is directing its investments toward extraction industries rather than manufacturing or tech, (2) China is largely importing the work force rather than creating local jobs, and (3) China is using its partnerships with African nations to flood their markets with cheap manufactured goods. None of these policies will create long-term growth for Africa.

Beyond China's intervention, Moyo's other "big" idea for Africa is for governments to sell bonds on the open market to raise cash. She seems to think that selling bonds rather than taking out loans will magically make African governments less corrupt and more accountable. But she doesn't take into account the time horizon effect---that many African leaders still operate on an very short time horizon and therefore focus on immediate gain rather than long-term investment. What's to stop a corrupt leader from selling bonds in the name of the government, pocketing the proceeds, and then high-tailing it into exile, leaving the next government to deal with the fallout---just like what happened with loans?

3zebedeejr
Maio 13, 2010, 3:19pm

Madknitta,

Thanks for your opinion of Moyo's work. I agree that many critiques of international aid are out there--many of which are more comprehensive than Moyo's--but she does provide concise, thorough data to start her argument: international aid may BE the problem, rather than just a failed solution, don't you think?

Moyo is obviously high on China's current and future investment role in sub-Saharan Africa, perhaps partially blinding her to some of the negative's of their sudden interest in the continent (although, to be fair, she doesn't pretend China's motives are ever simply humanitarian--they're in Africa b/c they need what Africa can give them). I don't see your connection between China's investments and the Cold War having caused so much of Africa's development problems, however. The latter is pretty much a given historical fact, while the former is a current investment partner with Africa, for the good or the bad. And the fact that China is investing in so much infrastructure for the continent as opposed to just sending money to African governments cannot be overlooked.

Also, I think you under-represent Moyo's "'big' idea" in the second half of the book. An enormous difference exists between the grants and "loans" (which are never repaid) from foreign governments and the capital markets Moyo proposes exploring (one of which is the bond market). Capital markets are largely from private investors/conglomerates who demand a return or they will not invest again. The bilateral and multilateral grants and loans are from governments who may wish for some accountability, but who will continue to pour money into Africa even if the money from past aid was clearly absorbed through graft. So to answer your question directly, nothing will stop a corrupt leader from stealing private investment, but (as Moyo points out) they will only do it once.

Another major part of Moyo's Dead Aid Plan you failed to mention is the true removal of trade barriers and agricultural subsidies by potential trade partners. Personally, I'm afraid the economic lobbies w/i the EU or the USA will never allow the removal of these import tariffs or subsidies, though, which is why I believe her plan would face many challenges in the real world.

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