Monday, April 06, 2009

The Man isn't only keeping Africa Down

While I'm not naive enough (or maybe it's too cynical) to believe that the recent calls to significantly reconsider aid will make as much of a difference, Mary O'Grady makes the point in the WSJ that poverty isn't a trap nor will money 'solve the problem.'

With US Treasury Secretary Timothy Geithner calling for a trebling of resources for the Inter American Development Bank, it's clear the message hasn't gotten through. From a paper written in 1987:

This is what the late, great development economist Peter Lord Bauer called "the disregard of reality" ... the claim that poverty is a trap that cannot be escaped without external aid an "obvious conflict with simple reality." "All developed countries began as underdeveloped," Bauer wrote. "If the notion of the vicious circle were valid, mankind would still be in the Stone Age at best."
Further, she points to a study published in 2006:
A 2006 paper titled "Foreign Aid, Income Inequality and Poverty," from the research department of the IDB itself, looked at the period 1971-2002 and found "some weak evidence that foreign aid is conducive to the improvement of the distribution of income [sic]. When the quality of institutions is taken into account, however, this result is not robust. This finding is consistent with recent empirical research on aid ineffectiveness in achieving economic growth or promoting democratic institutions."
Elsewhere, there's an interesting Q&A with Dambisa Moyo in FastCompany and her calls to end (most) aid to Africa (via Appfrica) it disappointingly didn't have as much depth as I would have liked. A related, pragmatic and somewhat moderating Q&A at the Freakonomics blog with Paul Collier who notes of Moyo's call to end aid: "Dambisa was my student, and I am delighted that young Africans are no longer prepared to have their continent defined by victimhood. They recognize that Africans can shape their own future. However, I don’t agree with her that aid is useless. Especially with the drying up of private finance, now is the hour for public international money; it is needed. It is, however, often badly used." And finally, William Easterly asks: "do you have to be pro-aid to be an Authentic African?"

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