“Poverty Trap” or “Dead Aid”?

For decades, economists, historians, scholars and the like have studied economic development on the continent of Africa, seeking to explain what factors account for the region’s slow growth. From my own research, two interesting schools of thought have emerged: the concept of the “Poverty Trap” as purported by venerated economist and director of the UN Millennium Project Jeffrey Sachs, and “Dead Aid”, the more controversial argument put forth by Zambian-born economist Dambisa Moyo. Essentially, it is a battle between what the West’s role should be in encouraging economic development in Africa south of the Sahara.

Sachs’ bestselling book, The End of Poverty, became an instant success upon its 2005 release, as he suggested that extreme poverty could be eliminated in Africa during our generation through a few simple actions undertaken by the international community. He juxtaposes the issues of poor governance and poverty in Africa, but instead of suggesting that Africa is poor because of bad government, he asserts that Africa has corrupt leaders because it is poor. This “Poverty Trap”, according to Sachs, is a result of a number of disadvantages that the continent faces, in terms of climate, geography, history and susceptibility to disease. Simple measures such as debt cancellation, investments in health and agriculture, and increases in foreign aid would help sub-Saharan Africa reach the “first rung” on the “ladder” of development, according to Sachs, as evidenced by success stories such as India and China.
Moyo’s 2009 book Dead Aid proved more controversial than Sachs’ concepts of what has caused poverty in Africa. A Zambian woman educated at Oxford and Harvard, Dr. Moyo argues the unthinkable—that foreign aid has caused the poverty that Africa faces instead of alleviating it. She finds that the billions of dollars in donor aid hauled into Africa over the past five decades has created a “vicious cycle” of aid dependency, corruption, and market distortion, leaving Africa in a state of perpetual need for more aid. She debunks the arguments of scholars such as Jeffrey Sachs, observing that if alleviating poverty is so simple, why have all efforts failed so miserably? Through observing the correlation between increased aid and decreased growth in most African countries, Moyo makes the controversial policy prescription that the West must stop its overflow of aid, and instead invest in Africa’s markets.

The purpose of this post is not to argue over who is right and who is wrong; both economists make valid and sound arguments in their respective works. What is more important is expanding our knowledge on the issue of economic development in Africa—understanding the arguments on all levels of the development spectrum. We have good intentions when we say that we want to help Africans out of poverty, but we do the very people we are trying to help an irreparable disservice, if we do not adequately educate ourselves on the differing methods for development. Other interesting books on the topic are William Easterly’s The White Man’s Burden, Wangari Maathai’s The Challenge for Africa, and Giles Bolton’s Africa Doesn’t Matter. I recommend these books because of the differing solutions they offer, and I hope you find them to be as thought-provoking as I have.


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4 comments

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    • on 18 February, 2011 at 10:43 am
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    Dear Davon,

    Thank you for your insightful response–I too agree with both Sachs and Moyo, but I do not feel that either argument is complete within itself. I am glad that we have competing ideologies that really give us the chance to think about the concept of sustainble development in complete terms. Also, I agree with your emphasis on investing in African business; this is a crucial point!

    • Davon Phillips on 17 February, 2011 at 4:10 pm
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    These are two interesting points on the stagnating economic growth in Africa. I find myself torn because, I agree with both Sach’s and Moyo. Eradicating poverty seems so simple, but yet, it has not been done. Money needs to be right hands so that poverty can be eliminated in a timely fashion . I do not think all aid should cease, however, it should not be excessive. Excessive aid might have contributed to in the inactive economic growth; we should not put Africa in position to depend on aid. Investment in African businesses can encourage development, thus, allowing the businesses to expand, create jobs, enable people to spend money, which can spark the circulation of money.

    • Mark on 17 February, 2011 at 12:59 pm
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    There is no question that over recent years, the economic aid is flowing, but not helping. Corruption of governments could be considered one of the greatest barriers since leaders can see this as free money and claim that it is going to those who desperately need it, but pocket it instead. Corruption is one of the issues that needs to be focused upon in the current system. In general, everything goes back to the concept of giving a fish verses teaching how to fish. To really influence economic development, donors should educate local businesses so they can expand, employ, and help those who need work and an income.

      • on 17 February, 2011 at 3:33 pm
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      Dear Mark,

      I could not agree with you more on the issue of teaching to fish as oppsed to giving a fish. Smart and sustainble aid is critcal to alleviating poverty. You also raise an interesting point about corruption, because, as donors we ask ourselves the question: Why should we give money to a country whose leader may siphon off funds for himself? But then we think of the people who we want to help, and the fact that they cannot control who their leader is. So then, what can we do? It is these types of questions I hoped to get people thinking about when reading my post. Thank you for your response!

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