Dambisa Moyo is a new voice in the aid debate. Born and raised in Zambia, she holds a Bachelor’s degree in Chemistry and an MBA in Finance from the American University, a Master’s degree from Harvard University and a Doctorate in Economics from the University of Oxford, which she gained under the supervision of Paul Collier. She worked for two years at the World Bank in Washington D.C. and since then has worked for eight years at Goldman Sachs in debt capital markets. She has positioned herself as a female African voice in the debate, in response to what she sees as the colonisation of the debate by white men.

Bill Easterly spent sixteen years as a Research Economist at the World Bank and is now Professor for Economics at New York University, joint with Africa House, and Co-Director of NYU’s Development Research Institute. He holds a PhD in Economics from MIT. He was born in West Virginia in the United States and has worked in most areas of the developing world, most heavily in Africa, Latin America, and Russia.

Jeffrey Sachs is currently the Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University. He is also Special Advisor to United Nations Secretary-General Ban Ki-moon. From 2002 to 2006, he was Special Advisor to United Nations Secretary-General Kofi Annan on the Millennium Development Goals. Before joining Columbia University, Sachs spent more than twenty years at Harvard where he was Director of the Center for International Development and Galen L. Stone Professor of International Trade. He holds a B.A., M.A. and Ph.D. in Economics, all from Harvard. He was born in Detroit in the United States.

Paul Collier is Professor of Economics and the University of Oxford, Director of the Centre for the Study of African Economies and a Professorial Fellow of St Antony’s College. From 1998-2003 Collier directed the Development Research group at the World Bank and advised the British government’s Commission on Africa. He is also Professor Associate of CERDI, Université d’Auvergne and Fellow of the Centre for Economic Policy Research, London. Born in Sheffield, England, he holds an M.A. and D.Phil. Collier was the recipient of a Distinction Award from Oxford University, and is a winner of the Edgar Graham Book Prize and the Lionel Gelber Prize for the world’s best book on international affairs for his The Bottom Billion.

Lindsay Whitfield holds a B.A. in Political Science and a B.A. in Economics, both from the University of North Carolina at Chapel Hill, as well as an M.Phil in Development Studies and a D.Phil in Politics from the University of Oxford. She is currently Project Senior Researcher at the Danish Institute for International Studies, prior to which she was a Research Fellow at the Global Economic Governance Programme, Department of Politics and International Relations and University College, University of Oxford. Whitfield is an American national and has extensive fieldwork experience in Ghana.

Roger Riddell is a development specialist with 30 years’ experience. As International Director of Christian Aid, from 2004 he led the organisation’s expansion into Central Asia, and he has worked extensively in conflict zones including Afghanistan, the Palestine Occupied Territories and Sierra Leone. He is currently a Non-Executive Director of Oxford Policy Management. In 2007, Riddell was appointed a member of DFID’s Independent Advisory Committee on Development Impact (IACDI). From 1984-99 Roger was a Senior Research Fellow at ODI. From 1981-83 he was Chief Economist for the Confederation of Zimbabwean Industries. He conducted the first poverty studies in urban Zimbabwe in the early 1970s. Riddell has worked extensively on macro-economic development issues in sub-Saharan Africa, in particular in the manufacturing and mining sectors. He is also an authority on the impact of NGOs in development and on the impact of human rights projects in developing countries.

When ‘aid’ is used in this debate, it usually refers to Official Development Assistance (ODA). ODA consists of grants or loans to countries that:

• are undertaken by the official sector, i.e. not by NGOs;
• have the promotion of economic development and welfare as their main objective; and
• are provided at concessional financial terms (if it is a loan it must have a grant element of at least 25 per cent).

Technical cooperation is included in ODA but grants, loans and credits for military purposes are excluded. Payments to private individuals through pensions, for example, are generally not considered to be ODA.

Tied aid credits are official or officially supported loans, credits or associated financing packages where the goods or services financed can only be procured from the donor country or a group of countries which does not include ‘substantially all’ developing countries. This type of financing is subject to some requirements about its use, such as that it not be used to finance something that the private sector could finance itself.

Untied aid has no procurement requirements. Unlike tied aid credits, untied aid describes official or officially supported loans, credits or associated financing which can be fully and freely used to procure associated goods and services in substantially all countries.

Funding for Multilateral Operational Agencies describes funding for international institutions with governmental membership which conduct all or a significant part of their activities in favour of development and aid recipient countries. This includes the multi-lateral development banks (World Bank), United Nations agencies (UNDP) and regional groupings (EU). Contributions to these agencies are pooled together and must be able to be disbursed at the discretion of the agency.

Vertical funding is focused on a particular sector or issue, rather than on a country or, as in health care, the whole health system.

It is a myth that aid works: it does not. Aid is the problem: it is a political, economic and humanitarian disaster for many in the developing world.

For African countries, aid is a curse that encourages corruption and removes the incentives for free enterprise. Africa needs to be freed from its addiction to aid through access to alternative sources of funding.

Feasible sources of alternative funding include international bond markets, encouraging large-scale direct investment in infrastructure, free trade in agricultural products and encouraging forms of financial intermediation such as microfinance.

The right plan to reform foreign aid and address the tragedy of extreme poverty afflicting billions of people is to have no plan because the $2.3 trillion spent by the West over the last five decades, organized according to plans, has not worked.

The advocates of the traditional approach to aid can be called ‘Planners’ and the agents for change can be called ‘searchers’.

Searchers find good things that work and get some reward, accept responsibility for their actions, and find out what is in demand. They have better incentives and better results, adapt to local conditions and find out what reality is at the bottom. They receive feedback and have accountability. Moreover, Searchers understand that poverty is a ‘complicated tangle of political, social, historical, institutional and technological factors’ (Easterly 2006: 5). The mentality of Searchers in markets needs to be adopted to reform foreign aid.

Rather than having a utopian ideal of the perfect aid institutions, we should ask: “what can foreign aid do for poor people?” (Easterly 2006: 10).

Our generation is the first in history to have the opportunity to end extreme poverty. This is because “the extent of world poverty is shrinking, both in absolute numbers and as a proportion of the world’s population” (Sachs 2005: 31).

Global poverty continues because there are poverty traps, which families cannot escape without the assistance of rich countries.

However, not enough money has been transferred from the rich countries to the poor countries to help their people escape these poverty traps. After all, when poverty is very extreme, poor people are actually not able to help themselves. One example of this is that they are just too poor to save for the future, meaning they cannot even get a foot on the ladder of development.

The volume of aid that needed is $175 billion a year, or 0.7% of the $25 trillion rich-world GNP in 2002. By contrast, the volume transferred in 2002 was only 0.2% of rich-world GNP.

Good investment of these funds would be in packages of interventions to meet basic needs, encapsulated in the Millennium Development Goals (MDGs).

Nothing will change for the poorest countries unless four distinct traps experienced often simultaneously by one billion people in these countries are overcome: the conflict trap; the natural resource trap; the trap of being landlocked with bad neighbours; and the trap of bad governance in a small country.

The traps are probabilistic: although the problems of the bottom billion are complicated and serious, they countries can escape them.

Addressing the traps requires an understanding that aid, as provided in the past, doesn’t work very well in these contexts and that change for the bottom billion must come from within.

The bottom billion need coherent development policy with a range of tools including the use of military intervention, trade and the encouragement of growth. Importantly, economic growth alone is not sufficient.

Understanding the economic, institutional, political and ideological effects of two decades of aid dependence is crucial to understanding how aid can work better.

Aid effectiveness is best realised when recipient countries place aid-enhancing conditions on the donors. Aid-enhancing conditions are ideological (priorities placed within a coherent framework which is asserted confidently), political (enough support gained from within governments and from the citizenry) and institutional (aid management structures which, inter alia, are centralised but deal with donors individually and by sector) (Whitfield 2008: 366-371).

The structural conditions within which governments must devise their negotiating strategies largely explain variation in recipient country control.

Ineffective negotiating strategies for aid are largely created by ‘a state of permanent negotiation with donors, the gradual entanglement of donor and government institutions alongside the limited (re)building of the recipient’s publicc administration, and the political dimensions of aid dependence.’ (Whitfield 2009: 21).

‘Aid works, but not nearly as well as it could’ (Riddell 2007: 381). While our knowledge of aid effectiveness is limited by partial and poor quality data, aid has contributed much to development and humanitarian goals in developing countries. Yet aid effectiveness has been constrained by fundamental problems in the donor-recipient relationship.

Aid is not allocated in a systematic, rational or efficient way to those who need it most, because allocation decisions are made by many different donors, each with their own political, strategic, commercial and historical interests. Recipients must negotiate with too many donors, whose numerous projects are not integrated into a common development framework. The inevitable duplication increases the costs of aid provision and reduces its effectiveness. The aid relationship is ‘lopsided’ with donors controlling decisions about aid allocation, type, conditionality and timeframe. Aid allocations are frequently volatile and unpredictable, undermining long-term planning.

…and access alternative capital instead. Dambisa Moyo’s argument is that Africa is addicted to aid and needs to wean itself off. Her ultimate aim is for an aid-free world, but Moyo does recognise that a more modest aid program designed to ‘address the critical problems faced by African countries’ can deliver economic value and contribute to Africa’s ‘development financing strategy’ (2009: 76). Alternative forms of capital should be accessed in international bond markets, encouraging large-scale direct investment in infrastructure, free trade in agricultural products and encouraging forms of financial intermediation such as microfinance.

…but only to make individuals better off. Bill Easterly argues that ‘Western assistance can help poor people in the Rest with some of their most desperate problems’ (2006: 321). He refuses, however, to offer a utopian blueprint to ‘fix aid’s complex problems,’ instead preferring incremental progress to hold aid agencies accountable for ‘tangible outcomes’ (2006: 321). The focus of such reform should be to ‘make individuals better off, not to transform governments or societies’ (2006: 322). Aid should be given to individuals, not governments, for obvious goods and inputs that ‘raise the payoff to their own efforts to better their lives’ (2006: 322). Aid agencies should continue to be supported so that their ideas and institutions can be borrowed by poor people and poor societies when it suits them to do so (2006:334). Aid agencies should also maintain areas of comparative advantage such as ‘distilling practical knowledge on operating banking systems or stock markets, giving advice on good macroeconomic management, simplifying business regulations, or making piecemeal reforms that promote a merit-based civil service’ (2006: 322). Overall, efforts should focus on making aid agencies accountable and fixing the bias toward observability of results so they can provide effective interventions and so that people will further support aid that works.

…0.7% Gross National Product for Official Development Assistance is needed. Jeff Sachs argues that ‘targeted investments backed by donor aid lie at the heart of breaking the poverty trap…Without donor funding, alas, the necessary investments simply cannot be financed’ (2005: 251). He makes the case that aid is needed to overcome the poverty trap because it helps to jump-start capital accumulation. Aid needs to be large enough to finance a proper investment plan, long-term to enable the recipient country to follow through on its program, predictable enough so that it does not jeopardise investment or macroeconomic stability, and harmonised to support an MDG poverty reduction strategy rather than aid agencies’ pet projects (2005: 276). This investment strategy should be based on a differential diagnosis of basic needs and should rely on an appropriate division of labour between the public and the private sector. In more recent comments, Sachs has emphasised how effective aid has been for global public health. Sachs speaks briefly about the need to fix the ‘plumbing’ of international aid to make the system coherent (2005: 269-270) but focuses on the idea of a global compact for development to engage the donor countries and commit them to development.

…to target the bottom billion, and complement it with other instruments. Paul Collier’s position is that ‘the problem of the bottom billion is different from the challenge of global poverty reduction’ (2008: xii). The crux of his argument is that ‘aid alone is really unlikely, in my view, to be able to address the problems of the bottom billion, and it has become so highly politicized that its design is often pretty dysfunctional’ (2008: 99). Aid has, however, ‘been a holding operation preventing things from falling apart’ (2008: 100). Indeed, aid successfully achieved its original purpose: to rebuild Europe after the Second World War. That does not mean it will be successful today. Rather, ‘in more recent times, the mistake with aid to postconflict situations has been that it has been too little and too soon’ (2008: 106). There is no great basis to believe that injecting billions in aid in the form of something like budget support would grow all economies but it does continue to make sense for some countries. Aid should be redesigned to help break some of the traps that beset the bottom billion, particularly in the case of landlocked countries where it should build transport infrastructure. Aid is likely to be most effective in addressing the governance trap by creating incentives, skills and reinforcement (2008: 108). In any case, aid should be complemented with other instruments, where appropriate, such as military intervention, trade and the encouragement of growth.

…by recipient countries setting aid-enhancing conditions for donors. Lindsay Whitfield argues that the quality of aid needs to be improved and that this is unlikely to happen through greater coordination among donors. Instead of focusing on the aid architecture and the constraints imposed on recipient countries, Whitfield makes the case that domestic politics are important in order for aid to be effective. The studies she presents seek to challenge the dominant view that African governments are anti-developmental (2009: 14). The effectiveness of aid is determined by the political economy of the relationship between aid agencies, governments and the citizenry (2009: 16-17). The quality of aid can be improved if recipient countries (African countries are the focus of the study) set aid-enhancing conditions on donors. Policy space for the recipient country is created when they have the confidence to translate conditionality into negotiating capital, and deploy it effectively in aid negotiations (2009: 20).

…by consolidating aid sources and professionalizing the process. Roger Riddell proposes the fundamental restructuring of the aid architecture to streamline its bureaucracy and systematically allocate aid. To overcome the distortions created by the short-term political interests of hundreds of aid agencies, Riddell proposes their replacement with a new International Aid Office (IAO) to allocate aid from an International Development Aid Fund (IDAF) for the poorest countries. The IDAF would be financed by compulsory donations from the wealthiest nations at a level equal to the amount of total need as calculated by aid professionals, representing an increase in overall aid against current levels. In countries where governments demonstrated the commitment, competence and capacity to use aid effectively, the IAO would allocate funds directly to the recipient government. In countries with governments deemed incapable of managing aid funds effectively, a National Aid Implementation Agency would be created and managed by external aid professionals.

The legitimacy and functionality of the new aid architecture would be ensured by transparency and stake-holder input. The crucial value-added of the new architecture includes efficiency and local knowledge. Leaving open the possibility of contracting out projects also introduces competition and increased focus and professionalization. All of these elements combined would vastly improve the quality of aid.

Moyo relies on a popular review of sections of secondary literature, news media sources, ratings and rankings, and the reports and websites of the institutions and organisations about which she writes. She does not claim to base her arguments on detailed field work. Instead, she emphasises her own experience growing up in Zambia and that of her family.

Her experience of being supervised by Paul Collier in her doctoral research is clearly drawn upon in her discussion of some sections of his work and his communication of these ideas in the media. However, she does not make explicit how she evaluates his research. She infers that her interpretation of the evidence is aided by her brief experience working at the World Bank and by her time at Goldman Sachs where she most recently was Global Economist and Strategist. It should be noted that she does not discuss in detail the research of most of the economists that she mentions in passing, including Rodrik, Alesina & Weder, Dollar, Sachs & Warner as well as Edwards.

To a great degree, she relies on major news sources such as the New York Times, TIME Magazine, the US Public Broadcasting Service and The Economist for her evidence about local politics. She also cites an array of indices and ratings, from Transparency International to Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, but they are not the subject of deep analysis.

On the most important questions-why aid has delivered so little -Moyo presents almost no evidence (see Kevin Watkins, Why Dead Aid is Dead Wrong) which puts in very serious question whether Moyo’s use of evidence is substantial enough to warrant her argument that aid is the problem and that it should be stopped.

Easterly’s arguments rely on the econometric analysis of data in order to test his own hypotheses and to subject those of others engaged in the aid debate to further analysis. An example of this is found in his analysis of whether aid raises growth among countries with good policies, conducted using the same techniques and specifications as the original authors but adding newly available data, a study that was later published in American Economic Review.

Easterly explicitly avoids basing his arguments on his own experience in America because he believes that ‘the fallacy is to assume that because I have studied and lived in a society that somehow wound up with prosperity and peace, I know enough to plan for other societies to have prosperity and peace’ (2006: 22). His sixteen years of experience at the World Bank observing the function of the aid structure and his dedication to econometric analysis which cautions him against supporting policies which cannot be proven, colour the rest of his argument. He seeks to support his case with reference to secondary sources, examples from developing countries and media reports.

Sachs marshals quantitative data for his arguments about extreme poverty, the provision of aid and the actions he proposes. The End of Poverty also makes considerable use of case studies on the economic development of Bolivia, Poland, Russia, China and the continent of Africa which combine quantitative and qualitative analysis. These case studies are largely informed by his roles as economic advisor to governments in Latin America, Eastern Europe, the former Soviet Union, Asia and Africa as well as his work with international agencies. Numerous advisors and contacts in these countries as well as organisations such as the UN Millennium Project are acknowledged by Sachs as helping him to understand local conditions and challenges over a period of twenty years. Sachs’ personal stories of his visits to specific local projects in places such as Kenya, Malawi and Bangladesh are used throughout The End of Poverty as the basis of detailed discussions of local development interventions and conditions.

Collier draws on extensive econometric analysis that he and his international research team has conducted and published in academic books and journals. Collier’s claim at the beginning of The Bottom Billion is that statistical evidence can be what smashes the crude images that define how we see the world and hold us prisoner to them (2008: xii). The Bottom Billion draws on this work which spans the topics of rural development, labour markets, macroeconomic shocks, investment and conflict. The argument presented by Collier is informed by his time as head of the World Bank’s Development Research Group, including his observation that, during his career, little has changed for the outlook of countries in the ‘bottom billion’ (2008: ix).

In her edited collection, Whitfield draws together eight qualitative case studies of African countries’ strategies for negotiating with donors in order to understand contemporary aid relationships. The studies include Botswana, Ethiopia, Ghana, Mali, Mozambique, Rwanda, Tanzania and Zambia. They are based on extensive knowledge and research experience as well as interviews with the individuals involved in the aid negotiations on both sides of the relationship. The authors use a ‘cases-within-a-case’ approach to provide a thick description of the process and content of the aid negotiations (2009: 103).

Whitfield acknowledges the difficulties in conducting in-depth research on a contemporary, interdisciplinary subject where access for researchers can be limited (2009: 18). She seeks to overcome these challenges through the selection of co-authors, where necessary (2009: 18). In addition to academic expertise, some contributing authors have professional experience working in these countries in capacities such as the Canadian International Development Agency, the World Bank and the Ghanaian Ministry of Trade and Industry.

Riddell synthesizes secondary literature as well as primary documents from aid providers to produce a historical map of trends in the aid industry, with his own experience as an aid professional providing the crucial background. He juxtaposes this with a survey of theoretical and philosophical arguments for why aid should be provided.

First, Riddell uses a combination of descriptive statistics and historical analyses and records to identify and explain trends, including fads in donor activity and priorities (e.g. good governance and impact evaluation). He divides donors into large, small, and multilateral, describing the degree of and motivation for aid provision over time.

Second, he lays out a typology of moral arguments for why aid should be provided in general as well as why governments and individuals should provide aid. In this he includes empirical examples of contrasting country attitudes towards aid as well as how perspectives on moral obligation have evolved. The bulk of his analysis then draws on secondary literature to identify dominant approaches to aid provision and assessment, as well as re-assessments as new issues of measurement methodology were raised.

The greatest criticism of plans in development and their associated use in providing aid is made by Easterly (2006). He argues that plans and the planners who create them are, in fact, part of the problem. The basis of this contention is evidence that ‘free markets work, but free-market reforms often don’t’ (Easterly 2006: 53). Therefore, Easterly argues, the West should stop planning how to achieve free markets (2006: 54).

By contrast, Jeffrey Sachs advocates a type of ‘clinical economics’ (2005: 74) which uses a ‘thorough differential diagnosis, followed by an appropriate treatment regimen’ (2005: 82). Sachs argues that a plan such as that provided by the MDGs offers the best chance to do better by the poorest countries which were failed by previously flawed plans such as structural adjustment because they identify the interventions needed and form the basis for a compact between rich and poor countries.

Riddell (2007) falls between these two positions, arguing that plans are effective when designed and implemented by technocratic, apolitical experts who consult prospective beneficiaries.

The argument of Whitfield (2008) has implications for the value of plans in the negotiations between donors and recipient countries. By focusing on the negotiating strategies of African countries and the conditions for success, attention is drawn away from donor plans to how well recipient countries plan to use negotiating capital to achieve their own objectives. The result is that the debate about the value of plans is inverted.

The idea of a ‘trap’ is interpreted quite differently by the various voices in the debate. Moyo (2009) sees the trap existing at the macro-level. She argues that the aid apparatus itself has created a trap for those in the poorest nations because it distorts the incentives of governments and removes accountability to their people. Aid dependency traps countries in a ‘vicious cycle of corruption, market distortion and further poverty’ (2009: xix). The aid trap can be escaped, according to Moyo, by ending the transfer of aid and seeking alternative sources of capital.

Sachs focuses on the poverty traps experienced by single households (2005: 51). He argues that poverty itself is the trap and that there are eight major categories of problems which contribute: no margin of income above survival, physical geography, fiscal trap, governance failures, cultural barriers, geopolitics, lack of innovation and the demographic trap. The poverty trap can be escaped, Sachs argues, by rich countries investing in the poor countries to unleash self-sustaining economic growth (2005: 73).

Collier also identifies traps at the micro-level and recognizes Sachs’ role in contributing to the concept of a ‘development trap’ (2008: 5). Collier’s work is distinctive in that he draws attention to four traps which have been largely overlooked but affect one billion people: the conflict trap, the natural resources trap, the trap of being landlocked with bad neighbours and the trap of bad governance in a small country (2008: 5). According to Collier, these traps can only be escaped with the use of a coherent development policy and with a range of tools including action now to address the fact that growth, by itself, will not be enough and an openness to the importance of trade in encouraging growth and the possible need to use military intervention.

Sachs (2005) seeks to provide a case for the intrinsic importance of aid and for the necessity of a volume of aid that will be effective in overcoming poverty traps. Aid is crucial to address the traps identified in a differential diagnosis of why countries have failed to thrive. Aid must also be sufficient for the interventions to address basic needs. Sachs’ argument is that this has not, to date, been the case. Moreover, some of the funds counted as Official Development Assistance (ODA) have not been for development at all, meaning that aid is not always given in a form that could finance basic needs interventions and has not always included sufficient funds to support the coordination of investments which need to be made at the global level (2005: 296-301).

Easterly’s (2006) contention is that aid is over-planned and is based on the wrong premise: that poor people need aid. Instead, Easterly argues that aid should be used in the service of poor people and should be guided by the answer to the question ‘what can foreign aid do for poor people?’ (2006: 10). As it currently stands, Easterly argues that aid sustains a bureaucracy that spans the globe and does not give poor people what they need. He argues that we are hypocritical to think that the rich need markets and the poor need bureaucracy (2006: 145). Easterly argues that the poor don’t need bureaucracy; they need methods of transaction that will serve them. Aid creates and maintains incentives which overlook the fact that poor people often have no money and no political voice to communicate their needs or motivate others to help them (Easterly 2006: 146-147).

Moyo (2009) asserts that systematic aid, in the form of concessional loans and grants, causes poverty. She argues that the belief to the contrary is the product of the aid myth. Africa’s failure to generate sustainable long-term growth is best explained by African countries’ dependence on aid. Other factors such as geography, history, culture, tribes and institutions have also played role, but none so great as aid (2009: 38).

Whitfield (2008) and her contributing authors focus on the strategies through which African countries have been able to advance their objectives in aid negotiations and how successful they have been. The approach, therefore, seeks to differentiate between countries’ sovereignty and their ownership of aid. They place countries on a spectrum of government control with Botswana and Ethiopia exercising the greatest level of control and Ghana, Zambia, Mali, Tanzania and Mozambique exercising the least (2009, 331).

Riddell (2007) argues that it is impossible to quantify the relationship between aid and growth due to the multitude of unpredictable factors impacting development. Consequently, it is unreasonable to expect that aid will make the crucial difference to any country’s overall development. However, Riddell states that even accounting for such uncertainty, the aggregate impact of aid given remains comparatively small (2007: 175). The key flaw of aid is that it is delivered based on the interests of the donor rather than the recipient. Political motives override technocratic best-practice in the aid allocation process of countries providing assistance. The independent and non-transparent nature of NGOs render them unaccountable to sponsors and recipients alike. This dynamic can only be changed through a new set of independent aid institutions with authority over and independence from existing institutions.