Camaelia and Sanjay’s (C & S) – “IMF’s Working Paper” referenced on Aid and Economic Growth post, is very helpful at this point in time when people seem to be consumed by Dambisa Moyo’s (DM) thesis.
As I have been pointing out – Moyo tended to concentrate on analyzing ‘aid’s failure’ literature. She ignored almost completely ‘aid- effectiveness’ literature. Camaelia & Sanjay have referred to some such studies. If Moyo wants Africa to succeed, she shouldn’t be spending time on defining how and why aid is destined to fail in Africa.
It is therefore a relief and timely to have C&S categorically conclude that: - development aid (DA) has a positive and robust effect on subsequent growth. That this growth is noticeable only in the long run should not surprise anyone.
It is obvious that a rural health centre, school or a mass literate community program – would not yield positive results overnight. It takes time before health of rural folk converts to dividends. Camelia & Sanjay’s study is also interesting for another reason – by pointing out that – aid effectiveness is influenced by such variables as donors’ characteristics and objectives. This means that donors who are genuine about aid giving and serious in wanting to disburse aid in an effective way – do indeed produce economic growth from economic assistance.
Again by C & S showing or alluding to the fact that – donors who concentrated on their own strategic interests, fail to achieve the aimed for economic growth in recipient countries, is ground for a need to focus on getting aid to work effectively.
That is – if only you can find a formula to make aid more effective, you would not be talking about aid being too large, wasted, misplaced, or not helpful. Africa has not benefited from this understandably huge resource transfer from the West – precisely because we have not found ways of getting aid from the West in an efficient and effective way. Conversely, all the by-products Moyo is citing are because the debate on aid effectiveness has been sidelined.
Bono & Geldorf have been pushing for more (quantitatively) aid out of – first, humanitarian concerns and secondly, in the belief that a problem of catastrophic proportions calls for large not minuscule aid packages. And once that money is donated, they figured it that it was now up to somebody else job to see that money was properly spent as intended and effectively.
Then comes Moyo to tell us that – large sums of aid money went to Africa with nothing to show for it. Okay, but so long as Africa still remains in the woods, advocating for aid discontinuation or reduction is not helpful. Instead, we should be seeking for ways to improve aid disbursement and reduction of waste.
Further, Dambisa Moyo seems to be committing other sins – first, in her book somewhere, she argues that Western countries should not be imposing “liberal democracy” as conditionality for giving economic assistance. She does so because she believes that democracy is not necessarily a prerequisite for economic growth. Moyo cites examples from the 3rd world like Chile and even China as countries which have achieved economic successes even though they were not democratic countries – Chile under Pinochet and China under Communist Party.
This is a dangerous proposition because it implies that she tolerates use of slave labor or dictatorship as a means to attain economic successes. And since South Africa’s Apartheid system was as such an economically successful model, should we hail it as good model to eradicate poverty? Yet every one knows that Apartheid was a terrible and abhorrent system against blacks. In USA, the country has been built on the backs of blacks and other minorities. Should we then praise that?
Even during Hitler regime, many scientific inventions and drugs were discovered. But should we hail it as good even though we know that some prisoners were used as guinea pigs in clinical trials? These are tough questions Moyo glossed over in trying to prove aid ineffectiveness.
There is an article in Toronto Star newspaper - the return of crony capitalism, which according to me exposes the hidden fascistic agenda – led by China – that, in face of the Western capitalism weakness, “state capitalism/socialism” should be promoted or take over. Without knowing, Moyo is supporting this stand.
Indeed, if the West, principally US does not pull up its socks, we are heading for a resumption of world fascism. China does not care how it gets to the top of the economic ladder. But we should.
In short, we have to be careful that – just because the West has been lenient in disbursing aid, and not harsh in administering its conditionalities to the extent of expecting African leaders to impose tough economic policies on citizenry, should not imply that ALL aid going to Africa should be cut.
More so, if cutting of aid implies replacing it with private donors/investors as Moyo tends to suggest – that is even more troubling. Dambisa Moyo does not hide her preference for private investments as opposed to government to government economic assistance – because according to her, aid given to African governments spoils them. Because they expect to get aid from someone, she believes then that they have no more incentive to do better.
But counseling Africans to opt for private investments or use of bonds to raise funds is dangerous. It is a plot I think would end in Africans being run over. In one word – become extinct.
Strangely too, Moyo is arguing in favor of Chinese help. Why Chinese aid is better has not been established beyond saying that it has fewer strings. But since aid from China is okay – establishes at least one fact – that rejecting aid in totality is not the issue. Therefore, if aid is tolerable, then why don’t we just improve its flow? If aid from the West is defective because of conditionalities, then why not simply relax them? Moyo has never mentioned any other characteristics about Chinese help other than better conditions.
Given lack of more convincing arguments against aid – I would suggest that the manner and effectiveness of aid form the crux of the matter. Tackle the effectiveness of economic assistance – no matter where it comes from, you are home and free. It is this problem that we should concentrate on, not the amount or motives for giving or receiving aid.
Unless we can discuss some of these issues openly without being accused of assaulting Dambisa – the debate will not produce useful results. If so, then she/we would have contributed to making Africa worse off. I am happy that Zambian Economist has not fallen into this trap, and continues to focus on substance rather than emotions.
Dr Kaela B Mulenga (Guest Blogger)
Economist, Columnist & Development Consultant
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Economist, Columnist & Development Consultant
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Disclaimer : The views expressed above reflects the author's personal opinions. They do not represent the views or policies of any organisation with which the author may be affiliated.