The Dead Aid debate so far

Dambisa Moyo is rapidly becoming the bête noire of orthodox development circles. Her recent book, Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa has stirred up a good deal of controversy, arguing that that ‘overreliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the “need” for more aid.’ (Incidentally, you would not believe how long it look me to realise that ‘Dead Aid’ is a play on Live Aid.)

In typically sceptical fashion, Emmanuel Yujuico at IPE Zone points out that ‘you also have to consider that several books have followed the same formula of catchy title plus scepticism about aid. Others have said it earlier–and better.’ He’s right, and people like James Ferguson have been writing on this for a number of years, but it’s worth noting that none of those authors (to my knowledge, at least) were black. As has been noted by Niall Ferguson, who wrote the foreword to Dead Aid, it is pleasing to see a ‘popular’ book on development that has been written by an African woman, rather than an American male. That said, as Global Dashboard’s own Jules Evans points out, Moyo hasn’t lived in Africa for years. Moreover, her career has followed the path of the archetypal high-flying western development worker – Oxford, Harvard, Goldman Sachs and the World Bank.

Back in February, Global Dashboard asked where the Dead Aid argument leaves traditional developmentists: ‘will they all dig in for a defensive game, or is a serious process of strategic renewal finally in prospect?’ Since then, promotional opinion pieces and interviews for Moyo’s book have led to a spate of debates (surely that is the correct collective noun?) within the development blogosphere and wider media that may be able to shed some light on this question.

In the early days of the debate, Francis Fukuyama, writing in Slate attacked Moyo’s critique of loans from international public institutions:

Were it not for the continued availability of concessional loans, she argues, African countries would be forced to get their acts together and meet international governance standards so as to be able to access global bond markets… Moyo’s case that Africa would have good government if it weren’t for the influx of aid stretches credulity.

Indeed, it’s that word ‘forced’ that is troubling. Forced at what cost? ‘Getting their acts together’, one suspects, would involve fiscal austerity still more severe than that demanded by multilateral development loans at present.

A few days ago, Jeffrey Sachs, the big beast of popular development evangelism (and an old teacher of Moyo’s), defended his industry (yes, it is an industry) in the HuffPo. In a dubious rhetorical flourish with echoes of Ha-Joon Chang, he accused Moyo of trying to kick away the ladder she used to get her impressive education (i.e. scholarships, which he equates to aid). Sachs adds:

Of course, most Americans know little about the many crucially successful aid efforts, because Moyo, Easterly, and others lump all kinds of programs – the good and the bad – into one big undifferentiated mass, rather than helping people to understand what is working and how it can be expanded, and what is not working, and should therefore be cut back. Nor do Americans hear that many poor countries graduate from the need for aid over time, precisely because aid programs help to spur economic growth and successfully prepare countries to tackle future priorities.

Yet if Sachs is angry about Moyo not mentioning aid’s successes, he is himself equally disingenuous about the diverse failures of aid regimes over the past half-century. He doesn’t seem to have any answer to this except to demand more aid. In the meantime, here in Britain, the Dead Aid debate reached the Hay Festival last week, where Martin Kettle argued that:

if good intentions could change the world then the advocates of aid would have redeemed Africa a dozen times over. Yet good intentions and admirable motives, while obviously better than malign intentions and suspect motives, are not enough. Africa has 100,000 millionaires. Every African alive today has received roughly $5,000 in aid.

Moyo struck back at her critics (Sachs in particular), with the point that ‘yes an aid-funded scholarship will send a girl to school, but we ought not to delude ourselves that such largesse will make her country grow at the requisite growth rates to meaningfully put a dent in poverty.’

To prevent this post growing to an unwieldy length (and readers’ attentions dwindling in inverse proportion), I’ll let you follow the rest of the debate: Sachs and McArthur reply to Moyo’s reply, at which point William Easterly intervenes on a point of geography. Mo Ibrahim suggested that we need to be paying more attention to something ‘good governance’, though what that might mean is unclear. Kevin Watkins (of the UNDP and Oxfam before that) pointed out that Moyo is tilting at windmills. Indeed, in a phrase I’d like to borrow from Laurie Penny, she is deploying a straw man so large that you’d expect to see Christopher Lee dancing around it. As Watkins rightly says:

most advocates for increased development assistance recognise that aid is not a cure-all for poverty and that trade is critically important (most of Moyo’s evidence on trade is actually lifted from Oxfam). They also recognise that corruption is a serious problem, that aid is often less effective than it should be, and that aid flows have to be managed to prevent economic distortions that can harm growth prospects.

Finally, Saturday’s editorial in The Guardian told us that ‘when a Zambian-born economist like Dambisa Moyo, in a much-debated new book, says aid is part of the problem, and gets a round of applause from many Africans, it is time to listen, although not to agree.’ Quite.

No doubt this is a debate that will continue for some time. This is a well-written set of articles, to be sure, but it’s not clear that any of these writers are really engaging with each other’s core arguments and assumptions. Perhaps it would be better to get them all in the same room, or at least on Bloggingheads.

Of course, common sense dictates that this shouldn’t really be an argument about aid or no aid, but about how aid is spent. The days when money was thrown at the problems of the developing world are well and truly over and development programmes have been getting ever more sophisticated in this respect.

However, it should never be forgotten that these are not purely questions of economics. As we students of international political economy are fond of saying, it’s about the politics, stupid. The choices over how aid is spent cannot be seen solely as ‘scientific’ economic decisions – they are socially bound and politically contested. It is in the sphere of politics that the real aid debate needs to be conducted, where the important questions are not about if, but about how aid is to be used.