Archive for January, 2011

UPDATE: Marc Bellemare pointed out some issues with this post, which I have addressed here.  These issues, though, strengthen the argument about strategic deglobalization . . .

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There have been an interesting series of blog posts going around about the issue of price speculation in food markets, and the impact of that speculation on food security and people’s welfare.  Going back through some of these exchanges, it seems to me that a number of folks are arguing past one another.

The most recent discussion was spurred by a post on the Guardian’s Global Development blog by John Vidal that took on the issue of speculation in food markets.  In the post, Vidal argues that food speculation is a key driver of price instability on global food markets, which results in serious impacts for the poorest people in the world – a sort of famine profiteering, as it were.

The weakness of this post, as I see it, are twofold.  First, it doesn’t take the issue of price arbitrage seriously – that is, how speculation is supposed to function.  Aid Thoughts, via one of the comments on Vidal’s post, takes Vidal to task for this.  As Aid Thoughts/the commenter point out, the idea behind speculation is to pull future price impacts of shortage into the present, stimulating responses to future shortages before they occur.  Thus, a blanket condemnation of speculation makes very little sense from the perspective of one who wants to see food security enhanced around the world – without speculation, there will be no market signal for future shortage, creating a world that addresses shortages in a reactive instead of proactive manner. This is a completely fair critique of Vidal, I think.

However, neither Vidal nor those responding to him actually address the evidence for significant market manipulation, and the intentional generation of instability for the purposes of profiteering.  This evidence first emerged in a somewhat anecdotal manner in Fredrick Kaufman’s “The Food Bubble: How Wall Street starved millions and got away with it.”  In this article, Kaufman uses a fairly limited number of informants to lay out a case for the intentional manipulation of wheat markets in 2008.  It is an interesting read, though I argued in an earlier post that it suffers from trying to be a parable for the pervasive presence of complex investment vehicles in the modern world.  And in the end, its findings can hardly be called robust.

Though Kaufman’s argument might, by itself, be less than robust, it received a serious empirical boost from the International Food Policy Research Institute (IFPRI) in the fall of 2010.  In a discussion paper that remains underreported and under-considered in food security circles (trust me, it is difficult to get anyone to even talk about speculation in program settings), Bryce Cooke and Miguel Robles demonstrate quantitatively that the dramatic price rises for food in 2008 is best explained by various proxies for speculation and activity on futures markets.  Now, we can argue about how large an impact that activity had on actual prices, but it seems to me that Cooke and Robles, when taken in concert with the Kaufman piece, have demonstrated that the speculation we see in the markets right now is not merely a normal market response to potential future shortage – indeed, the Food and Agricultural Organization (FAO) of the United Nations has been arguing for months that there are no likely supply issues that should be triggering the price increases we see.  In other words, while it is foolish to simply blame price arbitrage for food insecurity, it is equally blind to assume that all of those practicing such arbitrage are doing so in the manner prescribed in the textbooks.  Someone will always try to game the system, and in tightly connected markets, a few efforts to game a market can have radiating impacts that draw in honest arbitrage efforts.  There is need for regulatory oversight.  But regulation will not solve all our food problems.

But this all leaves one last question unanswered: what is the impact of price instability, whether caused by actual likely future shortages or by efforts to game markets for short-term profits, on the welfare of the poor?  Vidal, Kaufman and many others assume that the impacts are severe.  Well, maybe.  You see, where matters (again – yep, I’m a geographer).  In a very interesting paper, Marc Bellemare (along with Chris Barrett and David Just) demonstrates that, at least in Ethiopia:

contrary to conventional wisdom, the welfare gains from eliminating price volatility would be concentrated in the upper 40 percent of the income distribution, making food price stabilization a distributionally regressive policy in this context.

This finding may be a shock to those working in aid at first glance, but this finding is actually intuitive.  In fact, in my book (out tomorrow!) I lay out a qualitative picture of livelihoods in rural Ghana that aligns perfectly with this finding.  In Bellemare et al, I would bet my house that the upper 40% of the population is that segment of the population living in urban areas and/or wealthy enough to be purchasing large amounts of processed food.  Why does this matter?  This is the segment of the population that typically has the most limited options when food prices begin to get unstable.  On the other hand, the bottom 60% of the population, especially those in this cohort living in rural areas (it is unclear from the study how much of an overlap between poor and rural there is in the sample, but I am betting it is pretty high), has a much more limited engagement with global food markets.  As a result, when food prices begin to spike, they have the ability to effect a temporary partial, or even complete, disengagement from the global market.  In other words, much as I saw in Ghana, this study seems to suggest that temporary deglobalization is a coping strategy that at least some people in Ethiopia use to guard against the vagaries of markets.  Ironically, those best positioned to effect such a strategy are the poorest, and therefore they are better able to manage the impact of price instability on food markets.

In short, I would argue that Marc’s (and his co-authors’) work is a quantitative empirical demonstration of one of my core arguments in Delivering Development:

2. At globalization’s shoreline the experience of “development” is often negative. The integration of local economies, politics, and society into global networks is not the unmitigated boon to human well- being presented by many authors. Those living along the shores of globalization deal with significant challenges in their lives, such as degrading environments, social inequality that limits opportunity for significant portions of society, and inadequate medical care. The integration of these places into a global economy does not necessarily solve these problems. In the best cases such integration provides new sources of income that might be used to address some of these challenges. In nearly all cases, however, such integration also brings new challenges and uncertainties that come at a cost to people’s incomes and well- being. (pp.14-15)

I’m not suggesting Marc endorses this claim – hell, for all I know he’ll start throwing things when he sees it.  But there is an interesting convergence happening here.  I’m glad I met Marc at a tweet-up in DC a few weeks ago.  We’re going to have to talk some more . . . I see the beginning of a beautiful friendship.

In summary, while efforts to game global food markets do exist, and have very serious impacts on at least some people, they do not crush everyone in the Global South.  Instead, this instability will be most felt by those in urban areas – in the form of a disaffected middle and upper class, and a large cohort of the urban poor who, lacking alternative food sources, might be pushed over the brink by price increases.  The policy implications are clear:

  • We need to be watching the impact of price increases on urban food insecurity more than rural insecurity
  • Demanding that rural producers orient themselves toward greater and greater integration with global markets in the absence of robust fallback measures (such as established, transparent microinsurance and microsavings initiatives) will likely extend the impact of future price instability further into the poorest populations.
  • We need to better understand the scope of artificially-generated instability and uncertainty in global food markets, and establish means of identifying and regulating this activity without closing price arbitrage down entirely.

Brookings has come out with a report suggesting a dramatic decrease in the number of people living in poverty (using the $1.25/day mark as a measure of poverty) since 2004.  The report suggests that where 1.3 billion people met this description in 2004, today less than 900 million are dealing with similar circumstances.  In short, we are on target to achieve the first Millennium Development Goal (MDG) of cutting the global rate of poverty to half of the 1990 rate – indeed, the report suggests that:

the MDG1a target has already been met—approximately three years ago. Furthermore, by 2015, we will not only have halved the global poverty rate, as per MDG1a, but will have halved it again. (p.4)

This is remarkable news.  Brookings notes that the rate of poverty reduction varies dramatically by region, with East and South Asia cutting rates by about 50% between 2005 and 2010, while sub-Saharan Africa’s rate fell just under 8% in that same period.  Further, just two countries can account for the majority of this drop: India and China.  So there are still big challenges out there to be addressed, but things are looking up.

Or are they?

A glance at the methodology employed by this study leads me to think that the error bars on this study are rather huge.  Indeed, the authors are fully aware of the data and analytic challenges related to any effort to estimate poverty levels.  As the authors note, in development

we find it remarkably difficult to measure whether it is happening, and if so how fast. This is especially the case when it comes to producing global poverty data, as the challenges of national poverty data collection are multiplied several times over and then further compounded by the tricky—and unsatisfactory—business of converting national results into internationally comparable terms.

In short, the authors know that the project on which they have embarked is likely to generate estimates with significant potential errors – “error bars” as it were, around their data points, in which reality might actually exist.  Oddly, the report makes no effort to present these error bars.  Instead, it makes rather bold claims about reductions in the level of poverty largely without caveat.  I am not convinced these claims are warranted.

First, there are major data issues here.  Their 2005-2010 measures are predicated on recent household survey data.  Here is the problem with household survey data in sub-Saharan Africa: a lot of it is junk.  I’ve tried to deal with such data in Ghana, a country that has a relatively robust infrastructure for this sort of work, and found their survey data to be a mess.  I suspect that in some regions (Latin America, parts of Asia) the data is actually quite good, on the whole.  But in a lot of places (most of SSA and Southeast Asia) the data is likely very problematic.  And even where the data infrastructure is pretty good, the survey methodologies are often found wanting.  I was part of a team that tried to get a handle on livelihoods near a forest reserve area in Southern Malawi – to do so, we sampled 300 households across four villages (75 households/village) quarterly for a year, to capture things like seasonality in our dataset.  2400 structured interviews had to be undertaken to do this, and those interviews were supplemented by semi-structured interviews with subsamples of the group to explore issues like household power and gender relations to give context to that larger dataset.  This was enormously labor-intensive . . . and necessary to really understand what was going on in those villages.  Most household surveys are not done in this manner, and thus are subject to seasonal bias, or the presentation of data as comparable across the country when, in fact, it has very locally-specific meanings rooted in local social context. I do not expect that all national household surveys will be as rigorous or labor-intensive as ours was, but one should acknowledge the limitations of the data.  No discussion of this in the paper, but that can put a pretty wide margin of error on your findings.

I won’t even wade into the issues with population data that they gloss over in this study – I spend a good bit of time in chapter 9 of Delivering Development talking about census issues and the problems of compounding data error in estimations of economic growth.  Let’s just say that there are significant uncertainties around census data that compound any other errors in the data – again, growing error bars.

Second, there is a moment in the analysis that I found stunning – their projections to 2015 predicated on a surprising assumption – that distribution of wealth will stay the same.  Well, given that economic growth is, by and large, predicated on unevenness within regions, countries and between countries, there is basically no chance that the distribution of wealth will remain the same in any place that is growing.  Generally speaking, the GINI coefficient goes up as growth goes up . . . and a lot of places they are talking about are meant to experience fairly robust rates of growth now and in the near future.  More error.

What does this mean?  Well, to me it means that the data they presented like this:

Really has a wide margin of error, even for past observed data (but compounded going forward) that should look be presented like this (with margins of error in red, and not to scale.  I did not calculate them, as this is just illustrative):

OK, so perhaps there should have been some error bars in there.  So what?  Well, this is a policy brief, with policy recommendations that might actually be followed by someone . . . and this brief is arguing that we are on top of the whole poverty reduction thing, which is sure to become an argument for looking for ways to trim development budgets.

Even if the budgetary ax does not fall because of this brief, there is a risk of reprioritization that may not yet be appropriate.  In the recommendation

aid donors must adapt to the evolving poverty landscape and update their policies and programming to reflect current needs and priorities

the brief implicitly argues that agencies should be reevaluating their programming based on the findings in the brief – toward a focus on Africa and fragile states, and away (apparently) from much of Asia and those parts of Latin America, the Caribbean, and the Pacific where we currently work.  However, this is a recommendation based on much thinner evidence than it seems.

The worst part is that I think this presentation of the data undermines one of their excellent policy points:

One final policy recommendation revealed by this analysis is the need to improve the quantity, quality and timeliness of poverty data, at both the national and the global level. For both developing country governments and aid agencies working to fight poverty, it is impossible to efficiently allocate resources toward this goal using poverty data that is incomplete, unreliable or out of date.

At the country level, there has already been a significant uptake in the use of household surveys and an improvement in their quality. Yet in remarkably few countries is there a standardized, recurrent—and therefore consistent—approach to household survey data collection and analysis.  A renewed, long-term commitment to build capacity in domestic statistical agencies would be a valuable use of aid agencies’ resources.

I agree completely, and have argued for this need, but by presenting the data as so clear and robust, they have essentially undermined this argument.  Any policy maker looking at this will wonder why s/he should give more funding to something that already works . . .

Folks, policy makers will never learn to deal with uncertainty until they are faced with it . . . if we keep copping out and “firming up” mushy results into single bold trendlines, they will expect certain outcomes from uncertain data indefinitely.

After a few days off (a sort of sherbet for the mind, as it were), I’m back with Chapter 4 . . .

p.48: The chapter starts with a strong diatribe about the ubiquity of corruption in Africa.  First, it depends on where you are . . . and when you are.  Ghana in 1997 was run with small bribes.  Ghana now is navigable without much, if any, bribery – and a new generation of public servants is more efficient and transparent than ever.  Which leads to my next point . . . in the last chapter, Moyo warned against arguing that African culture somehow prevented development from taking root, and demanded we move past surficial explanations.  Here, however, she never interrogates why corruption happens – inadequate salaries of public servants, huge financial demands on the employed by extended families that lack access to social safety nets, etc.  By leaving this discussion out, Moyo is implying that Africans are inherently corrupt – and she is not moving past the surficial to interrogate causes.  Aid does not cause corruption to happen – aid is what is stolen when corruption exists.

p.50: Moyo is making staggeringly sweeping statements about how aid leads to corruption, arguing against the view that increased civil servant salaries reduces corruption.  She offers no evidence, just armchair psychology.  But there is evidence . . . that increased salaries help.  I’ve seen it myself, in Ghana.  It is not a magic bullet, but her dismissal of this corruption reduction tactic is unconscionable.  She’s just tossing away arguments that don’t fit her narrative.

p.51: Er, this isn’t Moyo’s fault (except that she is using it as evidence), but a study statistically examined the correlation between an ordinal scale of perceptions of corruption and economic growth?  Are you joking?  Do you know how many variables you’d have to control for to even begin to make that sort of analysis meaningful?

p.52: Wow, this is all sorts of loose correlation . . . OK, let’s say that 25% of all World Bank lending ever has been misused (as she claims).  First, is misused the same as stolen?  No – sometimes it was rerouted to other projects that were over budget, and might have had some productive outcome.  You have to capture that before you claim how much aid has actually been lost.  Second, this statistic does not really support the claim “vast sums of aid not only foster corruption – they breed it.”

In fact, let’s do some quick math here.  The World Bank had been making loans for 63 years at the time Moyo was writing.  Let’s say that an average of 110 countries a year received those loans (a low estimate, for sure), we have 6930 country/year data points.  Divide the $525 billion in total loans made by the Bank across this time, and we find out the average loan per data point (country/year) is  . . . $75 million.  Sorry, but this is not vast, by any stretch.

But let’s get concrete.  Ghana’s 2009 GDP was $29 billion.  That same year it pulled in $7.8 billion dollars in revenues.  Its net aid receipts were $1.2 billion.  Yeah, that’s a lot of money, but still only 15% of Ghana’s total revenues.  In the scheme of things, aid is not the big slush fund Moyo is trying to make it seem.

p.53: Holy crap, if you are going to point out we lend to corrupt governments, you might want to talk about why . . . and bring a real discussion of geopolitics to the table.  We lent to Mobutu because we feared the communists – everyone knows that.  So the problem wasn’t aid, it was the geopolitics driving bribes in the form of aid.

p.54: The section is title “Why give aid if it leads to corruption?”  Well, mostly because the links are pretty unclear, and because you’ve done nothing in this chapter to link them meaningfully.

To her credit, though, she is quite right about the agencies and how they value the size of the portfolio of lending, not the outcomes.  The World Bank has long been accused of this, and there is enormous pressure in every agency to get the budget spent on something . . . lest the budget be reduced next year.  However, USAID just took a huge step toward addressing this with Shah’s call for independent, transparent and publicly-available impact assessments of all projects.  Really crap projects will soon be visible to the public, and those responsible for them will be held to much greater account if this comes to pass.

p.55: Moyo has no idea what she is talking about on the Malawi food corruption issue.  As a result, she misapplies it to her larger argument that we lend regardless of corruption.  The issues of corruption in Malawi in 2002 had nothing to do with the food insecurity of the country that year – that was driven by the removal of a seed/fertilizer subsidy program at the insistence of the US and World Bank (who saw it as a market distortion).

p.57-58: And we are further into territory for which she seems to have no real understanding . . . the problem of government accountability is not really driven by aid.  The argument that aid reduces the need for taxes – and so the middle class and the population more generally could care less what the government is doing is astonishingly Western-biased (and neoliberal as hell).  The lack of responsiveness preceded aid, and persists because the state tends to lack the capacity to do anything for much of its population.  If anything, you could argue that aid has failed to improve state capacity such that the citizenry might feel bought in . . . but aid is not eroding civil society.

p.59: Mother of God, aid is what people are after when they try to take over a country?  Really?  Hell, even her example argues against this – Sankoh wanted the DIAMOND MINES, not aid.  She undermined her own argument – who the hell edited this book?

p.61-63: Well, yes, aid can be inflationary, causing problems for exports.  This is a problem that should be addressed.

p.64: Yes, inadequate absorptive capacity (the ability of a country to take up income of any sort and use it productively) can be a huge challenge in aid, and lead to waste and fraud.  But how often is it a huge challenge?  Note what I observed above – average annual World Bank lending, per country per year, is only $75 million.  That’s not a huge amount of money.  Absorptive capacity examples are much clearer in contexts where oil comes online quickly . . . which is why I am a bit concerned for Ghana at the moment.

p.66: OK, I’m getting worn out here by the overgeneralized, unsupported statements: “Aid engenders laziness on the part of African policymakers.”  Really?  All of them?

But what is the source of frustration here?  Keep reading, and you find this:

Because aid flows are viewed (rightly so) as permanent income, policymakers have no incentive to look for other, better ways of financing their country’s longer-term development.  As detailed later in this book, these options, like foreign direct investment and accessing the debt markets, offer more diversified and greater prospects for sustainable development.

This sounds a hell of a lot like an investment banker pitching a fund . . . oh, wait . . . she’s an investment banker.  Assuming Moyo believes that this really is the best way to go, it strikes me as remarkable how unreflexive she is about her own background and biases.

p.68: Oh, hubris: it seems that nobody has ever thought of an alternative to aid.  Really?  There is a lot of stuff in the later postdevelopment literature, all kinds of efforts to reimagine capitalism . . . now, we can argue about whether or not these are viable alternatives, but at least explore them before we run to the capital markets!

This is deeply frustrating – I like a controversial argument, but I also like a well-framed and supported argument.  We have the first part, but the second is completely absent thus far.

We’ve broken the 50k barrier!  And this is trending data . . . I bounced up and down between 50k and 70k today, so climbing into the 40k range is reflective of even more new sales . . .

Could this be sustainable?

Thanks to everyone!

Man, you have to like the trend for Delivering Development on Amazon right now . . .

Hey, nearly in to the top 50k, and the book is technically not on sale yet!  Of course, that preorder glut will go away soon, and then we will really see where we are.  But for now, I enjoy being in the top 0.6% of all books on Amazon . . .

Four days to go!

the revolutionary potential of the working class has been greatly overestimated.  The latest evidence?

Yep, if this doesn’t provoke the revolution, nothing will.  Guess I’ll go watch what’s on TV . . .

Hey, according to bookscan, someone from my neck of the woods bought a copy of the book yesterday . . .

Yahoo, a sale!  And even better, four days before the book is actually released.

And the beat goes on . . . ladies and gentlemen, Chapter 3.

p.29: Well, so much for starting brightly.  She has grossly oversimplified Diamond (which is hard to to, y’all) to argue that a country’s wealth and success depend on geography and topography.  Er, no, that would be a form of environmental determinism.  Diamond was writing an anti-racist history of the world, explaining how the conditions that would eventually result in the ability of some groups to colonize others, etc., was enabled by environmental and geographic situations – but Diamond does not simply erase colonialism from the equation, he is trying to set the stage for how it came about.  You could argue that he has a somewhat environmentally determinist take on the causes of colonialism, maybe . . .

Oh, and for Diamond’s purposes, Africa was not resource-rich . . . it lacked easily domesticable crops and animals when compared to other world regions.  The whole discussion of squandering natural riches on page 30 is a total non-sequitor in the context of Diamond.

Note: I really don’t love Diamond’s book . . . and I am defending it here.  Ugh.

p.30: OK, the geographer in me just screamed.  I can’t blame Moyo for this – it is all about Collier, who along with Sachs and a few others in the field of economics is slowly resurrecting environmental determinism (or at least geographical determinism) with their damn correlations between coastline, endowment of natural resources, and economic growth.  The connections between these three issues are so complex that any analysis that simply divides countries into three categories (resource poor/coastline, resource poor/no coast, resource rich) is going to over-aggregate different relationships and causes into gross oversimplifications and false correlations.  Further, the damn N for these analyses is going to be less than 20 for one or more categories (less than 60 countries in Africa, folks).  I mean, you can run non-parametric stats on this sort of thing, but for the love of God, why?  Just do the qualitative work, dammit.

p.31: Moyo seems to have completely and utterly missed the reason why colonialism had such a brutal impact on African development.  Sure, artificial countries were not great.  And the inherited governmental structures after colonialism often caused problems.  But this sort of thing only really mattered after independence.  By then, these places had been completely restructured into sources of primary materials for the industries of the Global North – infrastructure, agricultural innovation, etc., all of it was aimed at enriching someone else and ensuring the colonized never developed any economic power of their own.  This led to the perpetuation of colonial relationships by other means after independence (neocolonialism), and I have little doubt this is way more important than the borders or governmental structures when we try to understand the growth trajectories of Africa since independence.  Either she is stunningly ignorant of her own country’s history, or this is a very disingenuous reading of African history.

p.32: Wonderful, Paul Collier postulates that the more ethnically divided the country, the more likely the prospect of civil war.  In other news, people with guns are more likely to shoot one another.  How much more likely?  Is this a cause unto itself, or a variable mobilized to political ends that can be better explained by another variable (I’m looking at you, Rwanda)?

p.34: If you are going to use Botswana as an example of a place where growth and development were facilitated by good institutions (which it was), you still have to contextualize the huge growth numbers by noting the GIANT DIAMOND MINES in the country.  I’m just sayin’.

p.35: Nondiagnostic diagnoses make me crazy.  “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.”  Again, no kidding.  This is meaningless.  Of course, it also discounts her previous example of Botswana having meaningful economic growth. Or Ghana. Or South Africa.  In other words, her whole statement is an overgeneralized negative that doesn’t hold up to scrutiny (or, in fact, her own argument from a page ago).   Next part of the diagnosis: “No factor should condemn Africa to a permanent failure to grow.” I don’t know of anyone making that claim.  If we were, we wouldn’t really bother with development, would we?  We’d just give up and walk away . . .  And the final part: “for the most part, African countries have one thing in common – they all depend on aid.”  Er, and colonialism (except maybe Ethiopia, and then mostly on a technicality.  And don’t tell me about Liberia – for God’s sake, we carved the place out to resettle freed slaves).  And colonialism has a lot to do with what CAUSED the situations we now address with aid.

I cannot, for the life of me, understand how she is ignoring this.

p.40: Yes, I am skimming a bit here.  That first bit really killed me.  But here I can give her some credit for hammering the “democracy gives us development” crowd – at least that portion of the crowd who thinks the relationship is simple.  It is not, of course, and some of the new thinking on this examines how, for example, governments can make difficult decisions that balance needed reforms/changes and their electoral interests.  But sadly, much of the mainstream writing on the subject tends toward the simplistic.

p.42-43: OK, I am now uncomfortable with what seems to be a bit too much lauding of dictatorships.  Yeah, they produce great growth numbers, but growth is a means to an end . . . improving the human condition.  Dictatorships tend to create large tradeoffs in quality of life that seem, on balance, to have negative impacts on their populations.  Not a lot of Chileans think back on Pinochet as the good old days, you know?

p.44: Moyo is quite right – the timing of aid, and inappropriate aid, can do much more harm than good.  For example, having food aid arrive nine months after a famine (not all that uncommon), just as the new harvest comes in, crushes local food prices (oversupply of free food drives prices of locally-grown crops) and re-impoverishes the local farmers.  But this is not an inherent problem of aid – this is about timing, something people are well aware of, and trying to address.  Further, Moyo’s complaint about celebrities bringing mosquito nets to the continent, and thereby putting local producers out of buisiness – while valid – steps outside her definition of aid (government-to-government transfers) that she laid out earlier in the book.  Apparently her terms of reference are not stable.  Super.

p.46: Moyo does not know what I feel in my heart of hearts, despite her claims – I do think aid can work.  Her evidence against it has to do with aid’s impact on various economic indicators.  But this is just means to an end, and does not capture many of the benefits of aid in a clear manner (reduced illness means a better quality of life, and might be partially captured in a growing GDP via the extra days the individual can work . . . but maybe not very clearly).  This isn’t to say that aid is perfect.  Hell, I wrote a book arguing that we don’t really know what it is we are trying to fix in much of the world, so I have my issues with aid and development.  I just want an honest reading of their impacts and drawbacks.

The liveblog of my reading of Dead Aid will continue shortly.  However, it is worth passing along links to several really good critiques of the book, published elsewhere:

Lawrence Haddad from IDS has a review on his Development Horizons site (thanks Andy Sumner from IDS for the heads-up).

New friend Owen Barder (thanks again for the birthday drink!) has an outstanding, brutally detailed review on his personal site.  This link is to a short summary review, but he has a very prominent link to the longer review on this page.  Read it.

A very thin review from The Economist

And finally, a hugely important review from the blog Zambian Economist (thanks Ryan Briggs for pointing me to it).  Why is this review so important?  Well, besides its serious detail, it is written by a Zambian, thus undermining the argument that all of these critical reviews are just the development community beating down a voice from the Global South.

Given this body of reviews, why continue liveblogging?  Well, each of these reviews takes on the whole book, but is limited in size and scope (Owen’s megareview notwithstanding), whereas I can leisurely point out issues as I come to them without worrying about length if I go chapter by chapter.  Second, I think the liveblog gives some insight into how a critical reading of the book might go as it happens . . . or maybe you all just can see my mind at work.  In any case, I think there is something of value here, at least until you all tell me there is not.

Well, we got off to a bit of a rough start with chapter 1.  Let’s see how we do with chapter 2 . . .

p.10 In chapter 2, Moyo presents a history of aid.  She chooses to start with Bretton Woods.  One could nitpick this point, and how it begins during colonialism yet seems to ignore colonial infrastructural development in its history.  Not to say that colonial efforts were meant to serve as aid (in that they might improve people’s well-being), but they did introduce a lot of new crops, infrastructure and institutional structures . . . which certainly bears more than a passing resemblance to a lot of aid and development efforts.  But Moyo is not the only author who has chosen this somewhat arbitrary start date – A host of postdevelopment writers chose Truman’s 1948 speech decrying “underdevelopment” as the beginning of the development era without explaining how this speech actually created such a different world, given that decolonization did not really gain speed for another decade.

Well, OK, Moyo has decided to call the Marshall Plan development . . . fair enough, it certainly was a motivating force behind the idea that we could fix all the world’s problems.  And Moyo has divided the history of aid by decades . . . well, everyone needs a typology, and this breakdown is not all that different from others presented elsewhere.

p. 14 Whoa, what just happened there?  Moyo was just wrapping up a brief overview of the 1950s, in which she briefly laid out decolonization and the rise of the Cold War.  She quite rightly notes that aid was a weapon in this war, and was given to rather unpleasant leaders by both sides in an effort to maintain influence in Africa.  As a result, aid was not necessarily about how deserving or needy a country was, but about its geostrategic importance.  And then she ends the section by saying “It is impossible to know for sure what the true motivations for granting foreign aid to Africa were, but granted it was.”  Really?  Seems to me that she laid out the dual imperative behind aid at this time, and the rationale for aid to different countries has been dissected in many venues such that I think we can say why aid was given to a particular country.  Why eschew complexity in decisionmaking?

p. 17 Moyo’s politics are starting to leak out here.  Explaining the shift toward a poverty focus in aid and development, Moyo says “By the beginning of the 1970s the growth-oriented strategy was widely believed in policy circles to have failed in its mission to deliver sustained economic growth.”  The issue here is the phrase “was widely believed.”  There was a pile of empirical evidence that “big push” modernization approaches did not work.  This shift was driven by that evidence (McNamara was a data freak).  But Moyo subtly dismisses and denegrates that evidence with the term “belief”, as if these approaches had not worked.  Hmmm . . .

p.18-19 Moyo’s reading of the debt crisis is technically accurate, if broad, but it leaves open an odd question: why was everyone making such insane loans to Africa at this time?  What was all of this lending for?  Moyo completely ignores the huge glut of capital created by petrodollars at this time – a glut of capital that needed investment somewhere to stay productive.  The saturation of markets in the Global North led to lending in the Global South – something of an analogy to the contemporary subprime mortgage crisis, where another huge glut of capital (the folks at Planet Money call it “The Giant Pool of Money”) overwhelmed “safe” investment opportunities, and as a result more and more risky options began to look palatable in the search for investment vehicles.  Further, there is little doubt that these lenders all knew about the geopolitical ramifications of financial failure for a lot of these states, which meant they were secure in lending to them because various Western powers would gladly step in to prevent insolvency and the challenges to “friendly” leadership that would result – at least long enough for the lenders to get out with their shirts.  This unasked question perhaps reflects the fact that Moyo was herself an investment banker . . . which leads one to wonder if she did not understand this aspect of the debt crisis and how it came about, or she is trying to erase it.

p. 20 We are in the 80s now, and Moyo has just offered the oddest reading of the Asian Tigers I’ve yet seen . . . she writes “The experience of the newly industrializing economies of Asia gave these market-based ideas [free trade, laissez-faire] a popularity boost in policy circles in the United States and Europe.  Er, last I checked, the Asian Tigers were about as far from the free trade, laissez-faire model as you get: they were hugely protectionist, and strongly controlled investment in their economies to drive certain industries toward global competitiveness.  How the hell is that free trade, laissez-faire?  The Tigers have always been a bit of a challenge to that model, as I see it . . .

p. 24 And now we are into a full rewriting of the history of late 20th Century development . . . which oddly seems to contradict some of the very things that Moyo just wrote.  In trying to capture the rise of governance as an important topic in the 90s, Moyo writes “So after three decades of aid-centric development models, it was left to Western Democracy to save the day.”  Basically, Moyo has just rewritten structural adjustment as aid-centric to create a history of development that is all about aid.  Look, development cannot be simultaenously aid-centric and laissez-faire (or really even free trade, as aid distorts markets) – you have to pick one or the other.  There might be aid present in structural adjustment, but that aid is not at the center of the model – restructuring the economy is at the center of the model.  Aid was a means to that end!

p.26 Must say that when Moyo turns to what she calls “the rise of glamour aid” in the 2000s, she is pretty spot-on.  There’s been a lot of writing on this recently, what with Clooney’s Satellites for Southern Sudan and a general snarking at Bono and Angelina, and most of it is pretty consonant with what Moyo has written here.

p. 28 Moyo is right – aid (and development) have not delivered expected results.  No doubt about that.  But then she argues that aid remains at the heart of the development agenda “despite the fact there are very compelling reasons to show that it perpetuates the cycle of poverty and derails sustainable economic growth.”  Fine . . . except she is making this statement in the summary of a chapter, making it sound like a summary of what she has just presented – when she has presented absolutely no evidence to support this point as yet.  Narrative structure matters to the integrity of one’s argument, people.

Well, to summarize chapter 2: a rather whirlwind romp through 6 decades of development history.  It is a very shallow reading of that history, which is a problem here because Moyo’s entire premise is that the history of aid is one of failure.  To make this point, it seems to me, requires a serious engagement with the history of the enterprise.  This is not a serious history.  Further, the reading of that history which is presented is thin and at times confused/contradictory.  However, it works to one end – it is shallow enough to skim over all those pesky counterexamples and details that might derail the central argument that aid is a central cause of Africa’s problems.  This isn’t history, it’s an exercise in strategic argumentation that gives me little hope for the rest of the argument.