Book Report: Dead Aid by Dambisa Moyo / by Simmon Li

This book was shorter than I expected. It's short and to the point. Aid isn't working. Why not? Weak governance, lack of trade with eager partners (China, for example), and well, dependence on aid. She basically says that aid doesn't work because it actually discourages growth through several factors. Central to her thesis is basically that aid dependence acts like resource rents in that the government doesn't need to tax the population for revenue, therefore, there is less impetus for the population to keep the government in check, which leads to weak governance. She then lists some solutions that can help countries ween off structural, budget assistant aid. She lists involvement in the capital bond market, as well as other solutions that have been tested elsewhere. Trade with the Chinese and India has a huge potential to help lift Africa out of some poverty, but she notes that the Chinese don't really have an incentive to promote traditionally "capitalist" principles, but (and she stresses this point pretty well) the Chinese are investing in Africa expecting returns. This contrasts from the Western model of "investment" (aid), in which the West isn't really expecting returns (other than maybe to assist with debt repayments). She also wants to promote the trade between African countries, as they all have fairly protectionist policies regarding local trade. Finally, she talks about micro-financing. This is where people lend small amounts to other people directly, and from there, economic activity can be fostered.

It's important to understand that Moyo does not oppose aid in general, but rather, she has a specific problem with budgetary support (systematic aid, she calls it). She brings up some good points, and she's fairly realistic about it. She supports emergency aid (humanitarian) and aid that directly reaches the population, where the monies can bypass corrupt levels of government.

Good read, much shorter than I thought it would be. I found this book more challenging to read, actually, because she uses a lot of language that takes me a while to absorb, which I think is contributing to my perception of lack of depth.