Continuing GEG’s blog series The (Dead) Aid Debate, in this and my two next blogs I review two well-known, and one less well-known, critics of foreign aid.
Dambisa Moyo and William Easterly are now famous for raging against the ‘aid machine’. Yash Tandon is relatively unknown in Western countries, but very well-known in the so-called South for his equally vehement critique of the international aid system.
I feel compelled to do this review for two reasons. First, I am a fellow critic of aid and an equally radical one (I think). The review is to pay respect, but also to point out where their critics have gone astray. This is important, if we are going to reframe the aid debate without unhelpful dichotomies and generalizations. Second, in order to set out how the aid debate should be reframed (as I will do in future blogs), it is first necessary to discuss the inadequacies of the current ways in which the aid debate is framed.
William Easterly, The White Man’s Burden (2007); Reinventing Foreign Aid (2008)
Easterly is right that the aid system is stiflingly bureaucratic and over-planned, and thus rigid and inflexible in the way aid is allocated and used. He is right that the amount of planning required by donors of African governments in order to receive aid, whether for individual project proposals or for general budget support, is immense and many of the requirements are unnecessary. An Indian friend working in Ghana once mentioned to me that the public administration in India does not even use planning and budgeting instruments as comprehensive as the Medium Term Expenditure Framework, a tool pushed onto African countries in the late 1990s by the World Bank as a way to improve their budgeting–and now most African countries use it.
Easterly is applauded for making this point so boldly. However, his boldness might have backfired. His method and tactics were so polemical and critical that he offended those who he was preaching to, and so they stopped listening. I witnessed this personally at a WIDER conference in Helsinki. The metaphor of planners versus searchers is simplistic and thus easy to understand, but it also closed down the debate with the ‘planners’ rather than engaging them.
But that is not the only problem with Easterly’s argument. His metaphor overly simplifies the world and paints caricatures that are inaccurate, if not outright wrong. Let’s start with the planners side. Easterly is dead right to criticize big-P planning; in other words, ending world poverty through a global plan like the MDGs. He is also right that so many individual plans and reports which African governments are required to produce are not read by anyone and do not affect what gets implemented in a country like Ghana.
However, Easterly paints an image of economic development occurring spontaneously through the cumulative effects of ‘searchers’, by which he means the decentralized efforts of individual entrepreneurs and firms operating in a free market. But economic development has never come about by individual searchers coming together in an unplanned, spontaneous way, as he asserts—a fact which he should know. Some development challenges require structural solutions that individuals cannot address by themselves. They require governments to provide public goods and to provide incentives (and sometimes, I dare say, coercion) to achieve certain objectives. Easterly’s distinction between big-P and little-p planning does not capture this point.
Either advertently or inadvertently, Easterly continues to promote the state versus market dichotomy (where state is bad, market is good) that has proved so unhelpful for African countries. Economic history shows that neither the state nor the market on its own is adequate and that economic development is about finding a synergy between the two that works, but also changing that synergistic solution, over time, as conditions change. Asian countries have done this more effectively than African countries, and that is one of the keys to their success. It is not about the state intervening or not intervening, but rather how the intervention is done and the kind of state support provided, as Ha-Joon Chang and others have shown.
Both planners and searchers exist, but neither is the solution. Aid dependent countries definitely need less planning and they need more searchers in productive enterprises, for sure, but Easterly forgets about the context and structure in which searchers operate. He only sees individual agency (which is typical of a neo-classical economist). Using examples of the invention of the iPod, baby powder and the band-aid by individuals in response to everyday problems is not comparable to how new productive industries emerge in developing countries.
An African government having a development strategy is not bad per se, and indeed they have been necessary, but they need to be risk taking, flexible and responsive. The strategy has to lead as well as follow, incentivize investment in production as well as support individual searchers in the productive sectors. It is true that the challenges to economic development have to be tackled through trial and error, and thus require flexibility. Applying the concept of searching to governments, I would say that governments need to be searchers not planners—that is what successful countries have done.
Lindsay Whitfield is Project Senior Researcher at the Danish Institute for International Studies and editor of The Politics of Aid: African Strategies for Dealing with Donors (2009). This blog was published as a Danish Institute for International Studies working paper. For more on the (dead) aid debate, visit GEG’s resource page.
February 10th, 2010 at 8:15 pm
This is an interesting perspective Lindsay. Thank you. I’d be curious to hear your perspective on Paul Polak’s work and book, “Out of Poverty, What Works When Traditional Approaches Fail. ” someday too.
February 12th, 2010 at 3:30 am
Great point about the typical neo-classical focus on individual agency. One of the guiding questions of sociology is “structure or agency?”, and I think if Easterly and other like-minded economists considered this problematic in their analyses, they would arrive at much more well-grounded and nuanced conclusions such as yours.
Look forward to reading the rest of your series!