• Email
  • Single Page
  • Print

Aid: Can It Work?

The conundrum facing the rich countries is that everywhere in the developing world, and particularly in Africa, you see children dying for want of pennies, while it’s equally obvious that aid often doesn’t work very well.

Travel through the third world, and you may see clinics with signs proudly proclaiming that they were built by such-and-such an agency—but no other sign of life. It’s easy to build a clinic, but harder to ensure that doctors and nurses actually report for work in the days that follow—and when the doctor stops showing up, so do patients. Go on to the market, and there you may see the clinic’s stock of medicines for sale (marked “donated by” so-and-so, “not for sale”).

Continue on your way, and you may encounter bridges built with foreign aid over streams—but the construction led to erosion on both banks. So the ends of the bridge are a couple of feet higher than the ground, and vehicles can’t use it. Travelers continue to ford the stream in the dry season, and nobody goes across in the rainy season.

In rural Indonesia, you see a cultural problem that aid can’t easily address: pregnant women and babies going hungry, even having to eat bark from trees, while their husbands are doing fine. It turns out that the custom is for the men and boys to eat their fill first. In Ethiopia, you greet parents cradling hungry babies and explaining that they have no food because their land is parched and their crops are dying. And two hundred feet away is a lake, but there is no tradition of irrigating land with the lake water, and no bucket; and anyway the men explain that carrying water is women’s work. In both cases you can see why many who know about aid say that changing the status and power of women is of prime importance if aid and development are to be effective. But it is far from clear how this can be done.

Discouraged, you move on to southern Africa. You see the very sensible efforts of aid groups to get people to grow sorghum rather than corn, because it is hardier and more nutritious. But local people aren’t used to eating sorghum. So aid workers introduce sorghum by giving it out as a relief food to the poor—and then sorghum becomes stigmatized as the poor man’s food, and no one wants to have anything to do with it.

You visit an AIDS clinic there, and see the efforts to save babies by using cheap medicines like Nevirapine to block mother-to-child transmission of HIV during pregnancy. Then the clinic gives the women infant formula to take home, so that they don’t infect the babies with HIV during breastfeeding. A hundred yards down the road, you see piles of abandoned formula, where the women have dumped it. Any woman feeding her baby formula, rather than nursing directly, is presumed to have tested positive for HIV, and no woman wants that stigma.

Those are some of the challenges of making foreign aid effective, and they can stand for many other examples. There are also many examples of foreign aid that are extraordinarily effective, and that can be used to encourage generous donations. But the pitfalls of aid tend not to be discussed among humanitarians, at least in loud voices, for fear of scaring donors. And now along comes William Easterly, in his tremendously important and provocative new book, The White Man’s Burden, which asserts with great force that the aid industry is deeply flawed.

A few years ago Professor Easterly wrote a good book, The Elusive Quest for Growth; and his new book contains many dozens of separate observations that, taken together, make up the most cogent critique of the foreign aid system that I’ve seen. His specific suggestions make sense and his book is a pleasure to read and even frequently funny. But some readers will take away from it the fundamental conclusion—even though he doesn’t draw it—that foreign aid just doesn’t work; and that would be deeply incorrect. The fact is that many of the people you meet in any African village are alive because of foreign aid.

Professor Easterly’s book arrives on the scene just as there is a growing consensus in support of foreign aid, particularly for Africa. In the past, conservatives were often deeply hostile to aid, with Jesse Helms dismissing it as “money down a rathole,” and Tom DeLay saying it meant “putting Ghana over Grandma.” But some conservatives have changed their views, and the result is that the Bush administration is spending three times as much on aid to Africa as the lowest figure during the Clinton years (for which the Republican Congress at the time was partly to blame).

Partly because of Bono’s efforts, sympathizing with Africa has become cool. Stars like Angelina Jolie have publicly embraced Africa; so have billionaires like Bill Gates (who is having a vast impact with his philanthropy), while Tony Blair pushed to have last year’s G-8 summit pledge to help Africa. A fair amount of this was lip service, and Blair has determinedly looked in the other direction when it comes to recognizing the genocide in Darfur. But in the case of Africa, even lip service is progress.

The intellectual father of this increased interest in fighting global poverty is Jeffrey Sachs, a brilliant economist whose book The End of Poverty called for rapid increases in aid and argued that African nations are stuck in a “poverty trap” from which they can extricate themselves only with outside help. Governments including the US have agreed in principle to the so-called Monterrey Consensus, that governments should give “official development assistance” equivalent to 0.7 percent of GNP—meaning 70 cents for each $100 of national income. President Bush agreed to that target, and in 2005 US spending on such aid reached its highest level since 1986—but that was still only 0.22 percent, less than one third of the pledge.

Professor Easterly devotes his book to hacking away, with considerable satisfaction, at Sachs and the entire humanitarian approach taken by the UN. Frankly, I find that satisfaction off-putting, because Sachs’s evangelism for aid has saved countless lives in the developing world by raising money to provide drinkable water, distribute mosquito nets to protect against malaria, improve methods of raising crops, and much else.

Moreover, a single-minded emphasis on vast sums having been squandered can itself be misleading. Steve L. Radelet, a development economist, notes that over the last half-century, aid has averaged about $14 per person annually in the poorest countries. Even if much of that money has not earned a great return, neither have the much larger sums we have invested in, say, military hardware or agricultural subsidies.

Still, on the arguments about the effectiveness of aid, Easterly makes a better case than Sachs—and if Easterly can stimulate a sensible rethinking of aid, he will save lots of lives, too. To begin with, he casts doubt on the very notion of a “poverty trap,” where countries need outside resources to generate economic growth. Certainly it’s well known that some of the countries that have battled poverty most effectively—like China, Singapore, Malaysia, and others in Asia—have received very little aid per capita. The median ratio of aid to GDP of the ten countries with the highest per capita growth rates between 1980 and 2002 was just 0.23 percent. In contrast, as Easterly shows, the ten countries with the lowest per capita growth rates in that period, all negative rates, had a median aid-to-GDP ratio of 10.98 percent. That says nothing about causation, but it’s still not very encouraging.

When it comes to the effects of large-scale aid programs in Africa, Easterly’s argument is worth quoting:

Jeffrey Sachs and co-authors previously predicted that large aid increases would finance “a ‘big push’ in public investments to produce a rapid ‘step’ increase in Africa’s underlying productivity, both rural and urban.” Alas, we have already seen this movie, and it doesn’t have a happy ending. There is good data on public investment for twenty-two African countries over the 1970–1994 period. These countries’ governments spent $342 billion on public investment. The donors gave these same countries’ governments $187 billion in aid over that period. Unfortunately, the corresponding “step” increase in productivity, measured as production per person, was zero. Perhaps part of the reason for this was such disasters as the five billion dollars spent on the publicly owned Ajaokuta steel mill in Nigeria, begun in 1979, which has yet to produce a bar of steel.

Even in the poorest countries you see some signs of available money that could be used for investment, and is not. In Kisangani, in the heart of poverty-stricken Congo, wrenching malnutrition exists side by side with brothels, beer joints, and cigarette stands. If one could get the men who spend their money in those places to invest in the simplest of businesses or in their children’s education, they could begin to escape the so-called poverty trap.

If it were just Easterly making these cautionary arguments, that would be painful enough. But another new book in some ways goes even further. Robert Calderisi, a humanitarian who has had plenty of experience in Africa, calls for aid cuts in The Trouble with Africa: Why Foreign Aid Isn’t Working. Calderisi is a Canadian who spent three decades at the World Bank dealing with development problems. His book is more focused on Africa, while Easterly concentrates on aid in general, but they make similar arguments and, in some respects, have similar prescriptions. Calderisi emphasizes that the problem of aid is not just a matter of quantity:

Almost everyone in North America and Europe who shares my ideals believes that more aid, along with additional lecturing on governance, will help Africa. I want to puncture that illusion. Africans need breathing space much more than they need money. Not a Marshall Plan, but real backing for the few governments that are fighting poverty, plus political support for the millions of Africans who are resisting oppression and violence in the rest of the continent.

At the end of his book, in a chapter offering a series of specific recommendations, Calderisi suggests cutting direct aid to individual countries in half. He explains: “Contrary to conventional recommendations, direct foreign aid to most African countries should be reduced, not increased.” In his view “most” African governments are using aid corruptly, ineffectively, and wastefully. Helping people who seek different political arrangements at least offers the hope that governments may change their ways or be replaced.

Both Easterly and Calderisi argue that the world concentrates too much on amounts of aid given and not enough on how well it works. As Easterly puts it:

It seems strange that bureaucrats and politicians would focus on the input—total aid dollars spent. The Hollywood producers of Catwoman, which won an award for being the worst movie of 2004, would not dare to argue with moviegoers that the movie wasn’t so bad because they had spent $100 million on making it. We can understand the emphasis on aid volume only as reflecting the pathology that in aid, the rich people who pay for the tickets are not the ones who see the movie.

  • Email
  • Single Page
  • Print