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 . . .
Chapter 6
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!
Chapter 7
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.
Chapter 8
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.
Chapter 9
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.
Chapter 10
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 19^th 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.
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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.