The Role of Geography in Development: Easterly vs Sachs, Round II

I was wrong. Much to my delight, Jeffrey Sachs has responded to Dambisa Moyo (while attempting to avoid re-referencing Easterly and avoiding ad hominem attacks). I suppose you try to fight the battles you can win but Easterly responds anyway, taking a sniper shot at the premise that Sachs makes of why Africa is different. Argues Sachs (HuffingtonPost):

Africa's differences with other regions lie not in aid, but in circumstances and history [...] Africa's tropical disease burden, heavy concentration of landlocked countries, decline of aid for infrastructure during the 1980s and 1990s, and misguided attempts by Africa's creditors to collect debt servicing under "structural adjustment programs" during the 1980s and 1990s all played their part.

Easterly makes the point that there isn't evidence to support the idea that what makes Africa different is geography (from his own blog at AidWatch): "but Sachs unveils such a bizarre geographic theory of Africa’s poverty, with such misguided implications for aid policy, that I am forced to respond:"

Summary in brief of Sachs’ geography theory: a region will be poor IF they are tropical, IF rainfed, IF landlocked, and IF they have the wrong mosquitoes – which, yes, fits many African countries. With enough IFs, you can fit ANY theory to any set of facts. If I am a short, balding, grey-bearded, bespectacled, white male economic development professor residing in Greenwich Village, I will be writing this post right now – it fits the facts.

Sachs also has a rather convoluted “aid works” narrative in this column. He says aid was high enough and went to the right things enough to achieve great things in Africa on health and education. So why didn’t it create economic growth? Because aid wasn’t high enough and didn’t go to the right things enough. [...]

And from Huffington Post, Easterly notes:

I don't have enough evidence to test any one theory of Sachs, but I know it makes for bad aid policy. Make sure that aid reaches poor people, which usually means it should not go to poor governments.

Jeffrey Sachs makes a number of other points referencing Moyo's rebuttal and while I look forward to her response, the debate has widened. Arguing perhaps for a middle ground at FT, Mo Ibrahim, founder of MSI/Celtel [if FT asks you to register, just replace "false.html" with "true.html" and delete everything after it] - a mobile phone giant in Africa comments:

In her book, Ms Moyo suggests that government bonds can take the place of development assistance. This is unrealistic. First, debt markets are not open to the African countries that most need capital. Second, the cost of government bonds is materially higher than that of World Bank or other institutional aid. Why should African governments pursue a detrimental line of financing to satisfy an ideologically-led approach to development?

Furthermore, even before the economic downturn, most financial institutions were not interested in investing in sub-Saharan Africa in a sustained manner, despite the fact that for the past 10 years the rate of growth has exceeded that of Europe. It is implausible that they will be interested now. [...]

The critical argument should not be about aid or no aid – no one can question the necessity of pure humanitarian aid as long as it satisfies basic good governance criteria. The argument should be about where to focus aid to achieve the best returns for donor taxpayers and aid recipients. I propose two areas to focus aid: the hardware of Africa, infrastructure and regional integration; and human software, in the form of education and health.

While I have enormous respect for Mr. Ibrahim and his promotion of good governance in Africa (Mo Ibrahim Foundation), I'd make the following correction. He asks why "Why should African governments pursue a detrimental line of financing to satisfy an ideologically-led approach to development?" and not pursue cheap forms of subsidized funds from the World Bank. But that's Moyo's point: once you accept such funds you become less responsible to your citizens than you are to foreign governments and aid agencies.

People respond to incentives, so do governments - it is a point that Mr. Ibrahim should be most aware of given the prizes he offers for good governance and for heads of state to retire.