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Mon 21 Feb 2011
My efforts to liveblog my reading of Dead Aid have run aground on the reality of my life – I have a full-time job and a couple of things from my academic life that require my attention. That, and I admit to such frustration with the book that I start to question the purpose of my efforts – I saw this exercise as an effort to provide a detailed, reasonable critique of the book as I was reading it, and to offer redress as best as I could. However, as I have gone deeper and deeper into the book, I have come to realize that a serious effort to address and correct the numerous issues in this book was likely to consume another short book’s worth of space. I have another book or two worth of writing in me, but not on this topic. So, I will finish with this post, which covers the remaining chapters of the book in a more abbreviated fashion . . .
p.80: Yes, emerging markets seem to offer higher returns on investment – and they are often countercyclical to economies of developed countries. But this does not automatically make them useful hedge tools. Moyo seems to ignore the fact that most emerging economies have a limited capacity to address shocks, which means that a minor event for a diversified economy can lead to horrendous outcomes in a smaller, less diversified economy. For example, concerns over how the Europeans were going to define chocolate, which might have changed global demand for cocoa, wracked Ghana’s economy in 1999-2000 because cocoa was such a huge part of that economy. This makes bond offerings inherently risky, even for well-governed developing countries like Ghana – even a well-governed country can’t do much about global market fluctuations in their primary commodity. So these markets are quite a bit dicier as hedge instruments than Moyo seems to want to admit. There’s a reason money isn’t pouring into these places . . .
p.81: Moyo’s discussion of credit ratings for countries is amusing . . . in that she has chosen not to discuss how much of a disaster the rating agencies turned out to be in the US market for real estate products. Credit rating agencies are not arbiters of truth.
p.82: Good, she notes that these economies are indeed quite fragile and subject to unique stresses. However, she does not offer any real way to address these challenges – the idea that we are “over” the sorts of panics that lead to contagion (when problems in one place lead investors to question their holdings in other places), and therefore any big shock to an economy won’t trigger wider problems within that economy or surrounding economies, is empirically problematic.
p.87: Moyo addresses the issue of default, but it’s a whitewash that makes it sound like bond markets won’t really mind. Even if this were true, she fails to grasp that many causes of default will not be addressed by reform issues in markets – as long as developing countries are natural-resource dependent and not particularly diversified, they will be at risk from default . . . and defaults will keep them from diversifying away from natural resource dependence. This is one of the many reasons why aid is important!
This chapter strikes me as completely divorced from reality. Her treatment of concerns over the surge in Chinese interest in Africa casts them solely as short sighted concerns with China’s lack of conditionality on its loans – that is, people who object to Chinese engagement in Africa do so because China does not demand certain kinds of political or market changes along with its loans (some term these reforms, but the history of structural adjustment makes that term somewhat farcical). She dismisses the idea that many Africans are mistrustful of the Chinese, casting these concerns as a continuation of longstanding paternalistic attitudes toward Africa. She shores up this very thin argument by citing poll data to argue that the residents of many countries view the Chinese in a positive light. First, I would love to know the source of these data – she does not point to a source in the text. The reason I am interested is because I work in two countries where the view of the Chinese is not at all positive – Ghana and Malawi. I’m curious why the mistrust and concern I see in those countries is not manifest elsewhere. Second, assuming these poll numbers are valid, just because people have a positive view of China (or, at least a relatively more positive view of China than the US) does not mean that they are benefiting from Chinese involvement in their economy. This still has to be demonstrated. Moyo makes no effort to address this issue in her argument.
Finally, how can she talk about Chinese involvement and not address the issue of agriculture? This is where the real land-grabbing is going on. It is absolutely clear that the Chinese are investing in countries with arable land, and helping to build infrastructure to access that land. They are setting Africa up as China’s farm of the future – and that is not going to diversify African economies. It will simply perpetuate the challenges that Africa is already trying to address, and that Moyo seems to believe Chinese investment will solve.
I must say that this was one of the better chapters in the book – well, the first half. Pages 114-119 are a good, concise review of trade barriers that hinder African development. Then Moyo lapses into pro-Chinese argumentation that suffers from the same problems I saw in Chapter 7 – a sort of “the-Chinese-will-save-us” attitude. Interestingly, while she recognizes the serious challenges that Africa’s limited infrastructure poses for industrial development and economic diversification, she completely ignores the role that aid might play in building out such infrastructure. Instead, she seems to think that African countries should take out much higher interest loans in the private markets (because this would improve the country’s reputation on global markets, which would enable future loans . . . but does nothing to really explain why anyone should take a higher-interest loan and turn down aid in the first place), or trust external investors to work with them to build the infrastructure they need . . . which is something of a return to colonialism – after all, mother countries did build infrastructure in their colonies – just the infrastructure needed to ensure the continued export of valuable resources. Incidentally, anyone paying attention to Chinese investment in Africa can see exactly this sort of behavior taking hold . . . but Moyo is either willfully blind to it, or does not know her history very well. This is another example of a recurrent problem with this book: in the end, it is a political argument that selectively mobilizes its data to support those politics while ignoring anything that might contradict the argument. The real challenges of African development are much more complex than she presents, and the likely solutions are going to require more than just capital investments.
The first part of the chapter focuses on microfinance. It lays out the basic concept, and goes through the usual Grameen example. It also lays out an interesting Zambian adaptation of the idea. However, she dismisses a growing body of work that criticizes microfinance in a really shallow paragraph on 129-130, arguing that excessive interest rates will be reduced by competition (but doesn’t discuss where competition will come from, or if there is even room for competition in many microfinance-sheds – margins are pretty tiny in microfinance, even at high interest rates) and that borrowers forced into Ponzi situations (using one loan to pay off another, instead of productively investing it) will eventually go away as better information about their repayment rates becomes available (without discussing where that information will come from, or what to do about the honest farmer caught by an environmental or economic shock). It is distressing that she completely ignores the very large literature on microfinance’s failures in sub-Saharan Africa.
The discussion of remittances is interesting, but ends with a really weak recognition that they are really aid in another form – and they are justified because they reach the poor don’t increase corruption (but again, no substantiation of this).
Yes, Africa needs more savings – but this is a long-term problem in development that many have wrestled with. Acting as if this is revelatory, and failing to address the efforts to enable and spur savings that have and have not worked, does little to further the discussion. In this discussion, and that on the Grameen Bank, I find myself wondering (as I have many times in this book) whether the problem is that she really doesn’t know about these critical literatures, or she is strategically ignoring them to make her work seem more new and important. Either answer speaks to deep intellectual irresponsibility.
p.140: I find it interesting that Moyo thinks private loans would not be stolen, because any corruption would lock down future loans. This may be true (though I have my doubts), but if it is a large enough loan, and enables a single act of massive theft, a corrupt leader might make a calculated decision to steal a lot out of that loan even if it leaves their country in the lurch. Private markets might not encourage repeated theft, but if they cannot prevent the first act of theft (which guarantees an unrepayable loan) and then, after that theft, cut off all outside sources of revenue for the country, the net impact on that country’s economy is more or less the same – unrepayable debt and no new sources of income to build productive projects to generate revenue and pay that debt. I just don’t buy the “private markets solve governance issues” argument at all.
p.147: Here it becomes clear that labeling Moyo the “anti-Sachs” is a joke. All along, she’s suffered from the single greatest failing of Sachs – staggering intellectual hubris. On this page, she says something that echoes the words of Sachs: “Development is not a mystery; each of the elements of the Dead Aid proposal has been tried and tested and yielded success – and governments and policymakers know it.” This is the same argument, more or less, that Sachs made in The End of Poverty and subsequent work: we know how to do development, we just choose not to. This is an awful ad hominem attack on a lot of good, smart people trying to further development around the world. The fact is that there are not tried and tested methods of bringing development about – if there were, WE WOULD USE THEM! But neither Sachs nor Moyo really understand development as a discipline – its history and theories – and so they are free to make staggeringly arrogant statements. Of course, the failure of the MVP is giving Sachs his comeuppance . . . who knows what will bring Moyo around.
p.149: Wait, did she just suggest that the average African wants to overthrow aid regimes, but are held back by the force of the state? Are you joking? Anyone who has spent time studying recent African history (or the old discipline of peasant studies) knows that starving the population is never sufficient to generate revolt, so the persistence of deep poverty is not evidence for the coercive force of the state.
p.151: Good lord, she’s othering her own continent – really, she’s referring to the “four horses of Africa’s apocalypse – corruption, disease, poverty and war.” I feel like I am reading a travel narrative from the late 19th Century, or most anything written by Robert Kaplan. Why not just start quoting Heart of Darkness and get it over with?
And, in summary, her plan seems to be: turn off aid over a five year period, and the problems will work themselves out. It’s really that easy!
Oh wait, it’s not.
Well, that’s that. Having spilled many thousands of words on this book, and having tried to read it with an eye toward constructively reworking it, I find very little recoverable here. It is, in the end, a short, semi-coherent work of staggering intellectual hubris that sees little need to take seriously the history of development efforts, the talents of those working in development, the wide range of evidence for and against her proposals, or indeed any of the complexity of the real world. This, in sum, is what happens when an investment banker decides to tell development and aid experts how to do their jobs.
I now have much greater sympathy for those in the markets who get angry and frustrated with development/aid worker misreadings of speculation in food markets to argue that all speculation is bad and should be banned – here we have development and aid specialists presuming to lecture the markets on their behavior. If nothing else, we should take a lesson from this book and make sure that when we do engage with market actors, we are informed enough to make intelligent arguments that contribute to the conversation. Dead Aid, in the end, is not a contribution to conversations about development for those of us who actually do the work – it is a non-sequitur that does not deserve the attention it has received, or any further attention.
Sat 29 Jan 2011
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.
Tue 25 Jan 2011
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.
Mon 24 Jan 2011
Posted by Ed under Africa, research
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.
Thu 20 Jan 2011
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.
Wed 19 Jan 2011
Today, I begin an series of posts “live blogging” my reading of Dambisa Moyo’s Dead Aid. I had intended to read the book for some time, and over the weekend I finally was able to pick it up. I got two chapters deep, felt deeply frustrated, and went back through to figure out why. If I am frustrated, surely others are too. So, over a series of posts (this is the first) I will offer my thoughts on Dead Aid as I read it. Take them for what they are worth – I won’t correct the text, but I will raise concerns where I see them. I am not doing this to tear anyone down – indeed, I see this exercise as an effort to either shore up the argument in this paper by cleaning up otherwise loose or problematic readings of development history and practice, or provide a clear basis for the rejection of the argument. To that end, I hope that people will offer their own comments, argue with me, and argue with Moyo from a different perspective than my own . . . hopefully something good will come out of the mess. So, away we go . . .
Chapter 1: The Myth of Aid
p.3 The book begins with the usual litany of positive developments and remaining challenges for Africa. Fair enough, I have a bit of this at the outset of my book. However, she ends this section by arguing that the reason Africa has not yet realized its potential has its roots in aid. Ok, provocative.
p.7 Yikes, we are headed downhill almost right away, as Moyo defines aid. She breaks aid into three types:
- humanitarian/emergency aid (in response to disasters)
- charity-based aid (disbursed by charitable organizations to people on the ground)
- systematic aid (payments made directly to governments from other governments or multilateral institutions).
My issue with this typology is simple: it doesn’t clarify our understanding of aid, as the categories she uses overlap heavily: for example, humanitarian aid is often administered by charitable organizations, and may also consist of direct payments to governments. Further, bilateral aid is often implemented through charitable organizations acting as implementing partners who conduct work on the ground – there does not seem to be any space for this sort of aid in her typology, or her analysis. So, when Moyo then argues that the book is not concerned with emergency and charity-based aid, she is also (unwittingly) removing from play a lot of bilateral aid – a form of aid that she then reduces to concessional lending/granting. In short, it is not clear to me that Moyo actually understands the mechanics of aid and its implementation, which strikes me as a central part of any argument against it (or for it, for that matter). We shall see how this plays out . . .
p.8 Ah, we finally come to the myth of aid (I think): a fundamental, pervasive mindset that aid, whatever its form, is a good thing. Wait, what? Really? This strikes me as a very thin straw man, and it is supported by absolutely nothing. It is a bald assertion about the “western mindset” that strikes me as oddly echoing the really embarrassing overgeneralized assertions about various African ethnicities on the part of early-to-mid 20th century ethnographers. I’ll spare you the quotes. Not only is this assertion embarrassing in a horribly ironic way, it is hardly the stuff of the central argument for a book like this. Of course that attitude toward aid is a myth . . . it doesn’t really exist. At least not anywhere of which I am aware. It is really easy to prove something is a myth when nobody believes in it in the first place – which might have something to do with the success of this book: it is telling people something they already knew, which makes the reader feel good about themselves.