Dambisa Moyo’s book Dead Aid: Why Aid Is Not Working And How There Is A Better Way For Africa, contends that development aid from the West to Africa not only has not worked but is detrimental to the Africans. See www.dambisamoyo.com. An economist turned banker, the Zambian native marshals considerable evidence for this thesis. She draws on the work of P.T. Bauer, who was one of the first economists to examine and critically challenge the development aid orthodoxy. Curiously, she does not mention Ghanaian economist George Ayittey who has written extensively on the harmful policies of the African nations as well as the detrimental effects of development aid and ideology in fostering those harmful policies.
There is a sloppy error in the book. She refers to Harry Dexter White as the US Secretary of State at the Bretton Woods conference that created the International Monetary Fund and other international institutions. He was not. He was an official at the US Treasury Department who was identified by former Communist spies Elizabeth Bentley and Whittaker Chambers as a Soviet agent.
Although she recites some of the horror stories of corruption, Moyo goes beyond anecdotal reportage to offer some new insights.
For example, she notes how development aid that distributes free goods like mosquito nets harms African development as African manufacturers cannot compete with free. However, she does not mention the far greater issue of food giveaways such as the American Food For Peace program. The real point of Food For Peace is the linkage to the farm price support subsidy program. Food For Peace cargoes have to be transported in American vessels, unless a waiver is granted. The Bush Administration sought unsuccessfully to get congressional approval to buy grain in African countries to ship to nearby countries in crisis.
I was very impressed by Moyo’s insight into the inflationary effect of aid transfers to lesser-developed countries. I wonder if she is familiar with the "Austrian" school of economics and its analysis of the business cycle.
Moyo advocates for Africa the rule of law and protection of the property rights of all, free trade, foreign direct investment and participation in the international bond market. I think she misses the inflationary effect of the transfer of funds from the sale of bonds and the frequently sorry history of such borrowings. With the exception of emergency aid for natural disasters and the like, she advocates a phaseout of development aid to Africa.
Dead Aid could invigorate Africa. It will certainly invigorate the international debate on how to improve the African reality. -30-
About the author: Richard Cooper is an international trade executive with a manufacturing firm on Long Island, New York, USA. He is a Life Member of the International Society For Individual Liberty www.isil.org
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