So the mods have implemented their new authoritarian controls to make BE an oligarchy (I have a Princeton study proving this). I already paid my tribute to be allowed access but originally I was not given a flair. I’m not gonna take any chances on losing my ability to shitpost, so here I am with another RI just to be safe.
Preface: Just a quick note that this is an RI of a book, which is a little unorthodox. Wumbo if you have any qualms let me know and I’ll remove this. I’ll try and provide adequate context for what I discuss. Less quick note: This is a pretty expansive topic with a lot of complexities and nuances, so there’s plenty of room for discussion. If anyone wants to challenge anything I say, or add to this, feel free to do so as I’m far from being an expert. I feel like this is a good opportunity to spur discussion. But without further ado…
RI:
I’d like to take a moment of silence to honor a great loss. Aid, the friendly face of global consciousness, was pronounced dead at 12:01 am on March [someday], 2009 by Dambisa Moyo in her book Dead Aid, which claims that aid to the African continent has been a detriment, not a boon, for development. He/she will surely be missed.
Hmm, on second glance, aid still might have a pulse. Moyo makes a number of questionable claims and poorly argued points in her bestselling work. But before I jump into what I find bad, let me just note some good ideas Moyo has. Trade openness, easing of remittances, foreign direct investment, and ending US/EU agri subsidies could really spur growth in Africa (there’s a humorous fact Moyo notes that EU subsidies give cows more money per day than most Africans make). And I think the largest takeaway (not really if you read the book, but basically what most in the mainstream point to when discussing the book) is that Africa should have some more self reliance and should be consulted more on its future. It seems absurd that when President Bush needed an expert to discuss the AIDS epidemic in Africa with, he turned to Bono, an Irish musician, instead of an actual African expert. The world should stop acting like Africa produces no knowledge and getting outside observers to define Africa. We have these preconceived notions that Africa is all mud huts and wild animals but it’s an entire diverse continent with vastly developed cities and large economies. We should stop relying so much on Eurocentric representations of the “other” to make our worldview. But, sociology to the side, on to the bad.
Moyo wants us to focus on non-humanitarian aid. So not vaccines, but concessional loans and grants. The first issue arises when Moyo asks us to treat loans and grants as the same thing as loans have such a small interest rate they’re barely distinguishable from no-interest grants. Yet these loans create debt, which developing countries struggle to pay back. This debt can become so extreme that there is no longer money entering developing countries, but leaving. Moyo cites that between 1987 and 1989 $15 billion moved from developing countries to developed. This is what Moyo describes as a culture of aid-dependency, but it is really dependence on concessional loans. So clearly there is a need to differentiate between loans and grants. This is a small point however; things get much bigger…
After this lumping together, Moyo then goes on to say that aid has not worked for a few reasons. First of all, the number of people living in poverty has increased in sub-Saharan Africa. Second, gross domestic progress (GDP) has not grown at rapid rates. She also points to the slow growth in life expectancy. She blames all this on aid but it seems like she does not take into account other factors. The massive outbreak of HIV/AIDS drastically cut life expectancies and affected growth. If a large portion of the population is sick and dying they can’t be very productive and do not tend to save or invest, a large component of growth. There have also been many major conflicts in Africa, including civil wars and genocides. Health crises and conflicts like these can cut growth substantially. Aid, even if it is detrimental, is not the sole reason for slow growth. Things are also not so bleak according to the World Bank (WB) tables, as the poverty head-count index has fallen for Sub-Saharan Africa (so the # of people in poverty stat is misleading), recent growth has been above the world average, and under-five malnutrition rates have continued to fall (which is a major key to growth and development).
It’s about now I’d just like to touch on one point that will be important for the rest of the discussion. Moyo seems to have a goal of economic growth and not development. At one point she singles out Sudan as reaching unprecedented growth. Though it may have large growth, it does not boast large development. According to the WB, in 2006 more than a quarter of children in Sudan were malnourished, much higher than the average for Sub-Saharan Africa. Sudan has also shown negative growth in education, where primary completion rates have regressed in recent years. This is not to mention all the other problems such as the killings in Darfur and a multitude of other humanitarian crises (read: slavery). This issue of growth over development resurfaces throughout the book and will become more apparent later.
This narrow view of growth can also be applied to other aspects of aid. Moyo mentions a scenario where aid comes to a country in the form of 100,000 mosquito nets. Moyo then describe how a small mosquito net company in Africa is put out of business because they can’t compete. This causes ten employees to lose their job and their dependents to lose their income. But what Moyo does not mention is the social benefit of 100,000 mosquito nets. There are now many more people who have access to a preventative tool in the fight against malaria. Less sick people means more productive workers and less spent on medical expenses, not to mention the benefit of lives saved. Moyo does still have a point though. If this business were not in such a humanitarian field, it would be bad to have the unsustained influx of product that puts it out of business. It’s important that investment reach these small and medium businesses to allow Africa to thrive. Moyo claims this can be done through microfinance. One can look at the success of Grameen Bank and Kiva to see how microfinance can have an impact. However, as the NBER tells us, the power of microfinance is quite overstated. So it is not a panacea for all of African’s woes like Moyo makes it out to be.
Moving on to Moyo’s next beef with aid: She claims that because there is a massive influx of aid, disruption is bound to occur. She makes a bold claim that aid will make smart, educated, and productive members of a society turn away from real work toward “nefarious activities that undermine the country’s growth prospects.” There doesn’t seem to be any evidence presented to back this claim up and seems to be mainly a fear tactic. She also claims that aid money is a major cause of civil unrest and war because people have an incentive to try and overthrow the government to get some of that money. The only evidence she provides for this is one anecdote about how a rebel leader in Sierra Leone, when given the position of vice president, also insisted on becoming the chair of the board of diamond mining interests. She extrapolates this to aid as a resource but there is little evidence to back it up (this becomes quite a pattern in her book). It seems bold to suggest that poorer countries with less secure funding would be less prone to violence and unrest, as poverty leads to instability, which leads to poverty, which leads to instability, ad infinitum, according to the WB. It is also important to note that many conflicts are not based around capturing resources or money, such as the Rwandan genocide, so aid cannot be blamed for all of Africa’s conflicts.
Moyo’s biggest qualm is that aid fosters corruption. There is massive corruption in some countries and aid money can be funneled away from people and into leaders’ pockets. But this idea that if we cut off aid the corruption magically disappears seems too idealistic. Moyo seems to think that without aid, these corrupt leaders are going to have to suddenly implement smart economic policies, develop their countries, and help their people to get their hands on money. But it’s also possible these corrupt leaders would just enact more rent-seeking policies to make up for what they lost from aid. Cutting aid could make matters worse. As I said earlier, making a country poorer and less stable does not usually seem like the recipe for growth. If we treat the cutting of aid like a sanction, then there is evidence it can reform policies, but not without major disruptions and pain for the people. This is something to be discussed as there are obviously some tradeoffs. But to outright claim cutting aid is the best strategy without much evidence is bold to say the least.
Moyo moves away from criticisms of aid and gives us alternatives to aid money, such as participation in bond markets. Bond markets are a good way to secure funding, increase the reputation of a country, and attract foreign investment. If some small African nations are too risky to invest in, they can always pool together to give investors a diversified portfolio. So far 15 African countries have reached credit ratings since 2003 (hmmm so maybe all this aid hasn’t hurt them that much) and could begin to tap the markets. This is a good idea and definitely should be a goal of many African countries, but to do away with aid is not necessary for this solution to work and could in fact be harmful. The last time African countries issued bonds, 35 defaulted on their obligations. In the bond market, defaults could not be treated as kindly as with aid, so it is important that these countries still have aid available in case this situation arises again. Having access to aid also might make investors more likely to invest because there is that steady stream of income to pay off debts, making investment less risky. Also, the interest rate on bonds, according to Moyo, is 9.25% compared to 0.75% on World Bank Loans. Moyo claims this difference is worth it because bonds are “quality” investments. It’s a term not really elaborated on and Moyo seems to pull a Acemoglu. I think she needs a stronger argument for why 8.5% higher interest is worth it. I think it would be wise for a country that is seeking to grow to balance their income from both bonds to increase their standing in the market and aid loans to invest in their country without being inundated with crippling debt.
Next Moyo talks about foreign direct investment and for the most part everything seems fine. FDI can help in development and seems to allow great strides in infrastructure projects on the continent. However, there are concerns over who is investing in what that Moyo seems to gloss right over. China is the biggest player in African FDI and has, as Moyo describes, a “voracious appetite for raw materials, mainly oil.” Moyo praises the “hassle free, no-questions-asked” finance from China and enjoys the “hands off” practice, yet that seems counter to her concerns of corruption. This issue of contradictory statements does not stop there. Moyo also seems to praise China when it wrote off African debt to the tune of almost $2 billion. For some reason when the west forgives debt, it creates a culture of aid-dependency, but when China does it, they are Africa’s friend and are free to then give $2 billion more in aid (to no outcry from Moyo). Many criticize China for stripping the continent of its resources and controlling and influencing Africa in what some see as a new kind of economic imperialism. Moyo does note these concerns, but ultimately shrugs them off by saying there has been a slight increase in Chinese investment in agriculture, so therefore they aren’t just in sweeping up Africa’s resources. A poor defense to say the least.
But the concern over china does not end there. China has a terrible human rights record and that continues to show in its African investment. As Moyo describes, China often comes in at the last second and undercuts another country’s deal by lowering labour standards and environmental sustainability for a project. This is a major issue, as labour standards on the continent are weak enough and developing countries are going to be hit the hardest by climate change. But Moyo answers by saying in surveys many African’s view China in a positive way. But this is irrelevant and not a real answer. We can’t just write off large issues because China has a good PR team. Plus, Moyo should be more critical if she actually cares about corruption, because this positive view of China could easily be a result of corruption.
Just take a look at the 2015 discussion documents from the ANC, South Africa’s ruling party. The foreign policy section comes off almost as a propaganda for China and their great communist party. They’re also highly critical of the US for reasons unrelated to Africa. They basically say the US hasn’t appreciated China and Russia enough so the country might break ties. I understand the linger skepticism of the west due to the legacy of imperialism/colonialism, but this feels unrelated. This appears to be massive departure, which many attribute to corruption, from Mandela’s human-rights oriented foreign policy. I actually spoke to someone (not going to reveal any details for their and my privacy) who was telling me about how they were trying to have South Africans come to the US to learn about engineering/managing waste and water systems and then return to South Africa to help implement them in development projects. Yet officials came in and claimed the US was going to try and indoctrinate them so they wouldn’t allow it. The influence of China on African governments seems to be holding back development in many aspects. So if Moyo actually cared about rooting out corruption, she wouldn’t blow off fair criticisms of china with favorability surveys.
I think this just speaks to the point brought up earlier that Moyo is really concerned about growth, not development. Growth at any cost. She states that it is “not about perfection; it’s about survival – and survival today.” Which is why you see her arguing for “benevolent dictator[ship]” over democracy. As long as there’s growth, we can write off any concerns over human rights, development, environmental degradation, and seemingly even corruption. Hence, as mentioned earlier, she sees Sudan as a picture of growth despite its shortfalls in development.
Anyway, that's basically what I got. Those are the “badeconomics” I found in the book. But if anything I said sounded wrong or if you have any thoughts to add definitely do. The aid debate is definitely complex. It’s not as simple as plotting growth vs. aid on a graph and hitting the “linr. regrs.” button. So def things to discuss. Again, if this doesn’t fit the BE model enough, let me know mods, I’m willing to delete.
ここには何もないようです