Category Archives: Aid or Trade

How Corporate Charitable Foundations Influence Economic Policy in Developing Countries

What’s below is again summarised from Arundhati Roy’s ‘Capitalism: A Ghost Story’ (2014). It could be used in the Global Development topics on ‘Organisations in Development’ or ‘the role of Private Aid in Development’

A flow chart of what’s below would run something like this…

TNCs (pump their profits into their) – Charitable Foundations (who established) – The Council of Foreign Relations (which influences) – The World Bank (which sets the economic policies of) – Developing Countries

Basically Roy argues that in the early 20th century, three of the largest corporations in the world (one of which was Ford) set up Philanthropic (charitable) organisations – In the middle of the 20th century, after World War Two, these organisations were key to establishing the Council of Foreign Relations, the World Bank, the United Nations and the CIA. Essentially, Roy is arguing that US Corporations run the biggest international organisations in the world, which in turn coerce Developing countries into doing what these Corporations want.

The enthralling history of ‘philanthropic foundations’ began in the United States in the early 20th century. Among the the first was the Rockefeller Foundation, endowed in 1914 by J.D Rockefeller, founder of Standard Oil Company.

Rockefeller was America’s first billionaire and the world’s richest man. He believed his money was given to him by God. Among the institutions financed with Rockefeller’s money are the United Nations, the CIA, and the Council on Foreign Relations.

Philanthropic Foundations are non tax-paying legal entities with massive resources with an almost unlimited brief. They are wholly unaccountable, wholly non transparent, and are basically about translating economic power into social, political and cultural capital.

They emerged in the 1920s because it was then that US Capitalism began to look outward for raw materials and overseas markets. Foundations began to formulate the idea of global corporate governance. In 1924 the Carnegie and Rockefeller Foundations formed the Council on Foreign Relations (the CFR), also funded by the Ford Foundation as well. By 1947 the CIA was working closely with the CFR and over the years the CFR’s membership has included 22 secretaries of state, and all eleven of the World Bank’s presidents have been members of the the CFR. The CFR also contributed a grant of £8.5 million to pay for the land in New York on which the United Nations building now stands.

Given that the World Bank has more or less directed the economic policies of the Third World, coercing them to open up their markets in return for loans and aid, and given that the World Bank is steered by the Council of Foreign Relations, which in turn is steered by Transnational Corporations, it seems to follow that it’s TNCs which really have really determined the foreign policies of third world countries over the past few decades.

By the 1950s the Rockefeller and Ford Foundations were funding international educational institutions began to work as quasi-extensions of the US government, which was at the time toppling democratically elected governments in Latin America, Iran and Indonesia.

The Ford Foundation established a US style economics course in Indonesia at the Indonesian University. Elite Indonesian students, trained in counterinsurgency by US army officers, played a crucial part in the 1965 CIA backed coup in Indonesia which bought General Suharto to power. He repaid his mentors by slaughtering hundreds of thousands of communist rebels.

Twenty years later, young Chilean students who came to be known as the Chicago Boys were taken to the US to be trained in neoliberal economics by Milton Friedman and the University of Chicago (endowed by J.D Rockefeller), in preparation for the 1973 CIA backed coup that killed Salvador Allende and brought General Pinochet and a reign of death squads, disappearances and terror that lasted for seventeen years. Allende’s crime was being a democratically elected socialist and nationalising Chile’s mines.

Like all good Imperialists, the Philanthropoids set themselves the task of creating and training an international cadre that believed that Capitalism and by extension the hegemony of the United States was in their own interests.

Corporate foundations also provide scholarships at universities for courses in development studies – and many of these are for people from the middle classes in the developing world – these are the future finance ministers, corporate lawyers and bankers of the developing world. Of course the courses funded are the ones which sing the virtues of neoliberal economic policy, rather than the ones which are critical of neoliberalism.

According to Roy, not only do Philanthropic Foundations control the agendas of International Economic Organisations, governments and education systems, they also control the media and social movements which emerge to protest neoliberal policies – she gives a few examples of how, but probably the best piece of supporting evidence for this point of view is that we don’t question the role of philanthropic foundations in society. When Corporate funded philanthropic foundations first appeared in the United States, there were debates about their accountability, and people suggested that if they had so much money they should maybe raise the wages of their workers instead, nowadays we just don’t question them.

In summary, Roy argues that Philanthropic Foundations are simply a way of using a minuscule percentage of profits to run the world.

A Question to Consider….

The largest philanthropic foundation on earth today is the Bill and Melinda Gates Foundation. Roy points out that it’s odd that Bill Gates*, who admittedly knows a thing or two about computers, is now designing education, health, and agriculture policies, not just for US governments but for governments all over the world.

The question that Roy makes us ask is this – Is Bill Gates really trying to help people through his organisation, or is the Bill and Melinda Gates Foundation really a just a way for Gates to translate his economic capital into global political power, and to make sure that government policies the world over benefit Microsoft?

*Or to refer to him by his full name – ‘The Man Child Bill Gates’.

Jeffry Sachs – The Case for International Development Aid

This is a brief summary of the case Jeffry Sachs made for International Development Aid in his 2005 book ‘The End of Poverty’. Taken mainly from chapters 12-16

(1) Why is Aid needed?

Sachs argues that injections of aid are needed to break the poverty trap –because there is no where else money is going to come from when there is insufficient income to tax or save.

Sachs uses a description of a visit to Sauri village in Western Kenya to describe the poverty trap – the villagers face a range of poverty related problems including poor food yields due to lack of fertilisers and nitrogen-fixing trees, the fallout from diseases such as AIDS and malaria and the fact that children cannot concentrate in school because of malnutrition. All energies and money are basically spent on combating disease and staying alive.

As a result of the poverty trap the village faces under investment in the following five areas

  1. Agriculture
  2. Health
  3. Education
  4. Power, transport and communications infrastructure
  5. Sanitation and water.


Aid needs to be spent boosting whichever of these areas are undeveloped (and all of them, all at once, if necessary) because a weakness in one can mean money is wasted on another (it’s pointless spending billions on education if disease means kids can’t concentrate in school, or lack of roads means they can’t get to school.). This should be based on what Sachs calls a ‘clinical diagnoses‘ of a countries requirements.

(2) How much aid is needed?

There’s a number of ways of looking at this>

$70 per person per year for at least 5 years would being sufficient to provide suitable investment in these five areas for the poorest regions on earth (basically the bottom billion who are stuck in the poverty trap). After an initial 5 year period, Sachs believes that this figure should reduce considerably and that 10 years should be sufficient for a country to be self-sustaining financially.

Looked at globally The World Bank estimates that meeting basic needs costs $1.08 per person per day – 1.1 billion people lived below this with an average income of 77 cents. Making up the short fall would mean $124bn/ year, or 0.7% of rich world GNP.

(3) Arguements for providing International Development Aid

Firstly, using aid to eradicate poverty will make the world a more secure place

The US spends 30 times as much on its military as it does on aid (for the UK it’s about 8 times as much, 2002 figures), but spending money on military solutions is not going to make an insecure world more secure.

A CIA task force examined 113 cases of state failure between 1957 and 1994 and found that three explanatory variables are the most common:

  1. High infant mortality rates (which indicate low levels of material well-being)
  2. Openeness of the economy – the more open, the less stable
  3. Democracy – the more democratic, the more stable.

Sachs rounds off by listing 25 countries which America has intervened in following State Failure since 1962. His point is that state failure typically leads to US intervention, which is more costly than the price of providing aid which would prevent such interventions.

Secondly, Official Development Aid  is crucial to provide health, education and infrastructure, and because it makes up a significant part of the total income of many countries.

Thirdly,The  public will support a massive increase in aid if there’s leadership on the issue – nearly 90% of the US public support food aid (it depends how you frame the question). Also, broad support was garnered for The Marshall Plan, The Jubilee Drop the Debt Campaign and The Emergency AIDS campaign.

Fourthly – There is evidence that Aid can work:

Besides the usual green revolution and eradication of smallpox examples Sachs also cites…

  • The Global Alliance for Vaccines and Immunisation
  • The Campaign against Malaria
  • The Eradication of Polio
  • The spread of family planning
  • Export Processing Zones in East Asia
  • The Mobile Phone Revolution in Bangladesh

Five – the West can easily afford it 

Sachs points out that the richest 400 individuals incomes stand at just under $70 billion dollars, and the first two years of the Iraq War, which was an unexpected cost, was $60 bn a year, so basically yes. He also recommends a 10% additional tax on the richest for the purposes of development.

(4) Sach’s view of why Aid Doesn’t Always Work – Poor Countries Aren’t Getting Enough Aid! (**This can be used to criticise Dambisa Moyo”s views on aid. )

Poor countries are receiving no where need enough aid to make a difference to development – To demonstrate this he uses the West African Water initiative as an example – Worth $4.4 million over 3 years, but this only worked out at less than a penny per person per year, no where near enough to make a difference.

He also cites the case of Ethiopia – in 2003 it would have needed approx $70 billion to kick start development – half for health and most of the rest split between food productivity and infrastructure. It was then receiving $14 per head per year which was well short of the money needed. At the time the IMF acknowledged in private that this was not sufficient but in public made no mention of this.

Another way of outlining how limited current ODA is lies in the following:

in 2002 of $76 billion total assistance….only $12 billion amounted to what might be called development support to the poorest countries (most of the rest was emergency aid, with $6 billion being debt relief and $16 billion going to middle income countries.

As a result of this countries often don’t get anywhere near what they need – Sachs cites Ghana as an example – it requested $8 billion over 5 years in 2002 and got $2 billion. His point is that $2 billion is no where near enough to kick-start development.

(5)) Myths about why aid doesn’t work (**these could be used to criticise Dambisa Moyo)

He actually lists 10, but I’ve only included the first three!

Myth One – Giving aid is ‘money down the drain’

It is common to hear Americans bemoaning the fact that there is nothing to show for the amount of aid given to Africa. This is, however, unsurprising. The total amount of aid per Africa works out at $30 per head, but of this $5 goes to consultants, $4 was for food aid, $4 went to servicing debts and $5 for debt relief, leaving $12 per African.

Of the $3 of US aid to Africa, approximately 6 cents makes it on the ground African projects.

Myth Two – Aid programmes would fail in Africa because of backward cultural norms

Sachs points out that he frequently encounters prejudiced views based on African stereotypes even among those in senior positions in the aid industry – Such as the idea that Africans don’t understand western concepts of time. He dispels this by simply drawing on his own experiences telling him different things.

Myth 3 – Aid won’t work because of corruption

Nearly all low income level countries have poor levels of governance. However, corruption is not a reason to not invest in a country because the causal relationship runs in the direction of wealth reduces corruption. This is because when incomes increase people have more of an interest in keeping governments in check and there is more money to invest in good governance through better communication systems and a more educated civil service for example.

Looking at cross national comparisons reveals two things – Firstly that African countries governance levels are similar to similarly poor countries. That is to say that governance is not especially poor in Africa, and secondly there must be something else going which results in poverty other than poor governance – there are still some very poor countries in Africa with good governance yet high poverty, he cites Ghana as one such example.

Statistical indicators reveal that African countries grew at 3% percentage points slower than countries with similar levels of governance and income between 1980 and 2000. The reason for their low growth is geography and poorly developed infrastructure.

(6) A more ambitious approach to Development Aid

Ultimately Sachs believes we should be spending more on aid rather than less!

Sachs outlines ‘a needs assessment approach’ to development which basically involves identifying a package of basic needs, figuring out the investments required,, figuring out what poor countries can pay and then working out the finance gap which is what rich countries should meet. The list of basic needs includes such things as:

  • Primary education for all children, including teacher pupil ratios
  • universal access to antimalarial bednets
  • I kilometre of paved road per person
  • nutrition programmes for all vulnerable populations
  • access to modern cooking fuels
  • Access to clean water and sanitation.

To establish these poor countries would need $110 per person per year for 10 years (calculated by the UN for five countries – Bangladesh, Ghana, Cambodia, Tanzania and Uganda.

Of this Sachs believes that households and poor country governments could pay $10 and $35 dollars respectively meaning that $65 per person per year is the finance gap

Who should pay? Basically it breaks down like this…

USA – 50%
Japan – 20%
UK, Germany, France, Italy – 20%.

Related Posts (contains criticisms at the end )

Summary of chapters 1-4 of Sach’s End of Poverty

Does Aid Work? The Aid Audit

Does Aid Work? The Aid Audit:

Below is a summary of this World Service Podcast from 2015


‘Fifteen years ago, German journalist, Ulli Schauen helped compile a book of the top 500 global aid programmes… they ranged from schools for Maasai nomads to support for organic farming to training for volunteer sexual health workers.

The question is did they succeed or fail? Ulli travels to Kenya to see how the projects in that country fared. Ulli sets out to find if Aid really does make a difference.’

(These projects were all related to the original Millennium Development Goals and the folllow ups are here – one author’s blog – The Aid Audit: Development Projects Revisited After Fifteen Years

International Aid money has helped all of the projects below….


Project One – OSIGILI

in 1995 the Laikipiak Maasai formed an organization called OSILIGI (which means ‘Hope’.)

In one of the first projects OSILIGI organized reading and writing courses geared to the nomadic life. In April, August and December, when the nomadic herdsmen are settled, a teacher comes to the village. During these weeks children have concentrated lessons. This made-to-measure education is considerably cheaper than state elementary school. In 4 years, OSILIGI has reached 380 children with this programme, mainly from poor families.

Eco-Tourism - Marginalising the Maasai?
Eco-Tourism – Marginalising the Maasai?

However, the broader issue OSILIGI campaigns for is to establish land rights – to pasture and watering holes, and here they appear to have lost. The Maasai still have no formal rights and their land, and thus way of life, is under threat from agribusinesses and eco-tourism and in the programme we discover that the Maasai live amongst miles and miles of fences – which fence off private farms – one farm being as large as the island of Malta, which houses shipped-in Rhinos for eco-tourism, but this leaves little room for the Maasai.

Osigili seems now to be focussing on the education aspect, but the land rights issue has been taken up by another organisation – IMPACT. It is possible that more progress will be made in this area in the future.

Project Two – A Voucher System for Health Care

In the far West of Kenya the German Government Trained volunteer health advisers – 20 000 community health workers for 10 years. Unfortunately this terminated in 2006 and so no evaluation or final report can be found, the argument here, however, is that a lasting legacy

The German government now funds a voucher programme for the poor where they can use vouchers to receive free or subsidised contraception, maternal health services and HIV treatment.

Through the voucher programme local (privately run) hospitals receive $50 for maternal treatments and $12 for AIDs screenings (from the German Aid fund, they don’t get state funding) – 3/4s of the money goes on medicine and food, but the rest is available to allow for hospital expansion.

To give an example of how it works – one woman is interviewed who is HIV positive, and giving birth in the hospital meant that the infection was not passed on to her two children.

Despite the above, Kenya still failed to reach two of its MDGs -reducing infant mortality and improving maternal health.

But German Government trying to influence Kenyan health policy into the bargain. Germans wand to promote health insurance, Americans want to promote other issues – donors don’t co-ordinate their programmes.

Project Three – The Matinyani Business Cooperative


This is a cooperative of 4000 women, who initially set up a library, primary school and a health centre. They also established a range of small businesses devoted to weaving, water, candlemaking, bakery.

However, all of this stopped working years ago… 75% of the initial money went into other people’s pockets – so they couldn’t pay workers or for materials to keep the projects going.

However, what these women learnt in the early days of this project allowed them to establish their own businesses, many of which are today successful and export to other countries.

Project Four – Environmental Protection on Lake Victoria


Lake Victoria is heavily overfished and polluted.

This projects aims were to build water treatment plants and limiting the spread of the water hyacinth. There are laws in place about catch size (enforced by the mesh size of nets). However, it seems that everyone is happy about breaking the law and the aid-funded environmental organisation doesn’t seem to be enforcing the rules.

The World Bank Project labelled this one as unsatisfactory.

Project Five – A Foot Pump for Water

An Australian company called Kick Start (originally known as Aprotec ) which focussed on developing just one product – a small, foot operated water pump, claims to have lifted almost one million people out of poverty. Aid has been essential in this. The CEO says that it is not profitable to develop such products for people – it’s high risk, low return, and high cost – so it’s a market failure – thus subsidies in the form of International Aid, with this money going mainly into Research and Development and marketing (radio ads).

The pumps themselves are sold for $130 – and they have sold 250 000, which means about 900 000 will have been lifted out of poverty. We visit a tree nursery to see how this works – where an employee is using the foot pump (like a step machine) to pump water to water the young trees – this has allowed the company to grow a lot more trees and it is now much bigger than it used to be.

Question – Has development aid worked in the above five cases?

The programme finishes off by noting that we see all of the classic problems associated with Aid in the above examples, but it is the positive impacts which stick in his mind, especially the fact that when official projects collapse, the people who have gained skills carry on campaigning in different ways.

Find Out More…. There are another two episodes in the series if you wish to listen further!

Perspectives on the April 2013 Bangladesh Factory Collapse

The recent factory collapse in Bangladesh in which over 1100 workers died makes this the second worst industrial accident in world history – after the Union Carbide disaster in Bhopal, India.

For Sociology students studying Global Development this is a good example that seems to offer broad support for the continued relevance of dependency theory.

One article highlights the following factors which contributed to the 1000+ death toll –

  1. Bangladeshi factory workers cannot afford to not work when wages are only around the $50/ month mark.  Behind this, of course, lies Western demand for cheap and fast fashion – We only get £2 because of those low wages…..  
  2. The lack of long-term commitment to suppliers on the part of Corporate buyers – which means that it is economically irrational for many factory developers to invest in health and safety measures in their factories. As I see it behind this lack of commitment lies transnational firms’ desire to take advantage of the ‘race to the bottom’ – short contracts means the parent company can move out of Bangladesh at short notice to take advantage of cheaper labour elsewhere….  
  3. International Corporations effectively wash their hands of responsibility for monitoring health and safety through outsourcing – As a result, many of our high street shops have scant representation themselves in Bangladesh, leaving monitoring of health and safety to the Bangladeshi authorities, which basically means effective monitoring doesn’t take place.

However, The Ethical Trading Initiative takes a different approach, preferring to put responsibility on the Bangladeshi authorities, pointing out that…

‘A common reaction in the UK media and from NGOs has been to focus anger on brands sourcing from Bangladesh. But the view in Dhaka is rather different.  Newspapers here have concentrated almost exclusively on the failure by government agencies to implement the law on occupational safety and health (OSH) and the building code. This in turn is blamed on the nexus between garment factory owners and politicians – sometimes the same people.

According to the 2008 building law, any new structure, for any purpose, has to obtain an occupancy certificate from a government agency before it can be used; only six certificates have been issued since 2008, although it is estimated 4,000 – 5,000 new buildings come up every year.’

The ETI also aruges that the lack of unionisation of workers is an important contributory factor in these deaths – As the article above says, the workers could clearly see the cracks in the walls of the factory, but were forced to go in and work – Unionisation may have given them the sense of empowerment to stand up for their rights and stay alive.  

Of course both of these perspectives – one blaming the TNCs, the other blaming the Bangladeshi elite – still offer broad support for the continued relevance of Marxist Theory – At the end of the day this is still a situation where the poor and powerless are dying so the powerful can maintain their profits.


Adidas – still responsible for sweat shop labour in Cambodia

Garment workers’ unions and human rights groups recently held a people’s tribunal in Feburary to investigate the state of povery pay in the Cambodia garment industry.  The tribunal called for evidence from a wide variety of stakeholders  including over 200 workers who work for factories manufacturing clothes for Adidas and Puma.

All of this follows strikes involving 200 000 workers, dismissals of 1000 union leaders and mass faintings induced by malnutrition of garment workers.

The tribunal concluded that workers are not being paid sufficient wages to lift them out of poverty, one of the main causes being that massive inflation in Cambodia has seen a real wage of loss of over 14% in real terms.

The problem today is that “Despite experiencing sustained growth in the sector, Cambodia’s minimum wage allowance is US $66 a month and is currently the lowest of all its neighbouring states. This wage amounts to around half that required to adequately meet the average worker’s basic needs.”

It also concluded that despite their PR talk, big clothing manufacturers are still failing to do enough to sort out ‘supply side issues’

Just thought I’d post this briefly as a succinct update on the latests evidence of sweat shop labour – students can obviously use the example in any essay on the failure of TNCs,  the downsides of economic globalisation, or the continued relevance of dependency theory.

The above is summarised from an extract in the latest consumer magazine. 

A summary and criticism of Dambisa Moyo’s Dead Aid

In this blog post I summarise Dambisa Moyo’s views on the problems with Aid as a strategy for development – she is talking about Official Development Aid rather than Emergency relief aid.

I’m mainly drawing from her writing at the end of chapter 3 and the whole of chapter 4 – and I offer up a few criticisms all the way through – before you read this through – please note my main criticism of Moyo’s work –

The main criticism I have of Moyo is that she uses statistics that show correlations between a high level of aid receipts and poor economic growth and then attempts to imply causality (aid causing poor growth) by using emotive, highly selective, anecdotal and even hypothetical (she invents a country – Dongo) ‘evidence’ to back up her case.

I say ‘imply causality’ because she never actually uses the word ‘cause’ – but the reader is left with the impression that this is what she is driving at. The end result for the less well informed reader is that they are stuck with a number of ‘easy to understand memorable case studies’ which imply that aid causes poverty – even though Moyo never actually says as much.

Anyway, here is my interpretation of the criticisms Moyo makes about the role of aid in development and a few criticisms that some people might make of Moyo’s work.

Criticism 1 – Aid does not bring about economic growth

At the end of chapter 3 – Aid is not working, Moyo starts to outline her basic criticism of Aid – This basic criticism being that aid has not effectively promote economic growth in Africa – Over 1 trillion dollars has been pumped into Africa over the past 60 years and there is little to show for it. In fact, according to Moyo, aid is malignant, it is the problem!

Moyo explains this through the following hypothetical example

 ‘There’s a mosquito net maker in Africa. He manufactures around 500 nets a week. He employs 10 people, who each have to support upwards of 15 relatives. However hard they work, they cannot make enough nets to combat the malaria-carrying mosquito.

Enter vociferous Hollywood movie star who rallies the masses, and goads Western governments to collect and send 100, 000 mosquito nets to the affected region, at a cost of $1 million, the nets arrive, the nets are distributed and a good deed is done.

With the market flooded with foreign nets, however, our mosquito net maker is promptly out of business. His ten workers can no longer support their dependents. 

Now think of what happens 5 years down the line when the mosquito nets are torn and beyond repair, we have now mosquito nets, and no local industry to build any more. The long term effect of the ‘aid injection’ has been to decimate the local economy and make the local population dependent on foreign aid from abroad.’

Backing this up with some stats, Moyo goes on to point out that ‘even the most cursory look at the data suggests that as aid has increased over time, Africa’s growth has decreased with an accompanying higher incidence of poverty. Over the past thirty years, the most aid-dependent countries have exhibited growth rates averaging minus 0.2 % per annum.

Moyo also argues that a direct consequence of aid-driven interventions has been a dramatic descent into poverty – citing Zambia as an example, and the fact that when aid flows were at their peak between 1970 and 1998 – poverty in Africa rose to a staggering 66%.

The problem Moyo has here is that she fails to present sufficient evidence to make her case – it’s well known that the later part of the period above was a time of global economic slowdown compared to the previous 20 years, which itself could play a major role in Africa’s poverty, as could be the case with the debt crisis. One could also simply cite Botswana and Ghana as case studies of aid-recipient countries that have grown to counter her one example of Zambia.

Criticism 2 – Aid Encourages Corruption, which in turn retards growth

Unlike the previous section, Moyo does use a reasonable amount of statistical (drawn mainly from Transparency International) and case study evidence in this section…

According to Moyo – If the world has one image of African statesmen, it is one of rank corruption on a stupendous scale. One of the best examples of this is Mobutu, who is estimated to have looted Zaire to the tune of $5 billion. He is also famous for leasing Concorde to fly his daughter to her wedding in the Ivory Coast shortly after negotiating a lucrative aid deal with Ronald Reagan in the 1980s.

Having provided a couple more examples of ‘classic African Dictators’, Moyo then cites that classic statement made in n 2004 by the British envoy to Kenya, Sir Edward Clay,  who complained about rampant corruption in the country, commenting that Kenya’s corrupt ministers were ‘eating like gluttons’ and vomiting on the shoes of foreign donors. In February 2005 (prodded to make a public apology), he apologised, saying he was sorry for the ‘moderation’ of his language, for underestimating the scale of the looting and for failing to speak out earlier.

Moyo further argues that at least 25% of World Bank Aid is misused. One of the worst examples is in Uganda in the 1990s – where it is estimated that only 20% of government spending on education actually made it to local primary schools.

According to Moyo, while it is not the only cause ‘aid is one of the greatest aides to corruption’ – arguing (Actually it might be more accurate to say ‘asserting’ given the lack of evidence in this section of her book) that ‘with aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid’.

However, Moyo now drifts from the data and starts implying causality by asserting that growth cannot occur in an environment where corruption is rife, citing the following (un-evidenced) reasons (among others).

  • Corruption leads to worse development projects – corrupt government officials award contracts to those who collude in corruption rather than the best people for the job. This results in lower-quality infrastructure projects.
  • Foreign companies will not invest in countries where corrupt officials might siphon off investment money for themselves rather than actually investing that money in the country’s future.
  • Aid is corrosive in that it encourages exceptionally talented people to become unprincipled – putting their efforts into attracting and siphoning off aid rather than focusing on being good politicians or entrepreneurs.

Criticism 3 – Aid Corrupts Civil Society

Dambisa Moyo: Spreader of Neoliberal Hegemony?

OFFERING NO CONCRETE EXAMPLES OR EVIDENCE TO SUPPORT HER POINT, in this section Moyo asserts that Africa needs a middle class which trusts each other in order for development to occur. The problems is that in an aid environment, governments are more interested in lining their own pockets rather than encouraging entrepreneurs, meaning that the middle class cannot expand until it reaches that ‘critical mass’ which leads to sustained growth.

Criticism 4 – Aid undermines social capital

ONCE AGAIN OFFERING NO CONCRETE EXAMPLES OR EVIDENCE TO SUPPORT HER POINT, here Moyo argues that… In an aid dependent environment, there is no need for you to trust your neighbour and no need for your neighbour to trust you… Foreign aid weakens social capital by thwarting accountability mechanisms, encouraging rent-seeking behaviour, siphoning off scarce talent from employment positions and removing pressures to reform inefficient policies and institutions.

On the above two points it is also worth noting that these criticisms are really just fusions of the previous two criticisms of aid – that it prevents economic growth and breeds corruption.

Criticism 5 – Aid and Civil War

Moyo points out that there are three fundamental truths about conflicts today: they are mostly born out of competition for control of resources; they are predominantly a feature of poorer economies; and they are increasingly internal conflicts.

She then goes on to say that ‘this is why foreign aid foments conflict. The prospect of seizing power and gaining access to unlimited aid wealth is irresistible’. Unlike in the previous two sections, here she offers up one example to support her argument (Sierra Leone) before reminding us that aid also causes conflict more indirectly by reducing the prospects for economic growth.

The Economic Limitations of Aid

Having outlined five downsides of aid, Moyo then outlines its economic limitations – suggesting that there are four – once again lacking examples

  • Aid reduces savings and investment – assertion, no examples
  • Aid can be inflationary – assertion no examples
  • Aid chokes off the export sector (Dutch Disease) – cites unreferenced IMF studies
  • Aid causes bottlenecks due to low absorption capacity – Uses Uganda as an example

Aid and Aid Dependency

The end result of all the above is that aid leads to Aid Dependency – to the extent that aid makes up 13% of the average African country’s GDP. According to Moyo, this throws up the following problems

  • It makes Africans lazy
  • It leads to low tax revenues (no need to tax the citizenry if money is flooding in from outside!)
  • Citing Boone (1996) – it leads to bloated inefficient public sectors.
  • Finally, it leads to Western donors being able to call the shots.

In the final section of the chapter, Moyo pays homage to Peter Bauer, and briefly mentions that both William Easterly and Paul Collier disagree with the ‘one size fits all’ aid approach to development – before introducing the next sections of the book which are devoted to explaining why Africa should adopt free market (encouraging FDI/ Issuing bonds etc.)  rather than aid driven solutions to underdevelopment.

Criticisms of Moyo

Really, I’d just like to go back to what I said at the beginning and say that…

The main criticism I have of Moyo is that she uses statistics that show correlations between a high level of aid receipts and poor economic growth and then attempts to imply causality (aid causing poor growth) by using emotive, highly selective, anecdotal and even hypothetical (she invents a country – Dongo) ‘evidence’ to back up her assertions.

I say ‘imply causality’ because she never actually uses the word ‘cause’ – but the reader is left with the impression that this is what she is driving at. The end result for the less well informed reader is that they are stuck with a number of ‘easy to understand memorable case studies’ that imply aid causes poverty – even though Moyo never actually says as much – possibly because she might think that, really, there is insufficient evidence to make the case which she alludes to.

One has to reflect on why Moyo is so selective – I think it unlikely that an Oxford and Harvard Graduate has failed to read widely enough for this to be innocent – Especially when the author has 8 years at Goldman Sachs under her belt….so could it be that this is simply an overt attempt to promote a neoliberal anti aid agenda?

Why I’m running a half marathon to raise money for Water Aid

Water Aid works in 23 countries in Asia and Sub-Saharan Africa, with a total of 606 staff. Its mission is to ‘transform lives by improving access to safe water, hygiene and sanitation in the world’s poorest communities’

To give you an idea of what water aid does – watch this video

According to this 2010-11 annual review – Last year they spent about £50 million – of which £32 million went to water and sanitation delivery service, £11 million on fundraising and £6 million on governance. You might criticise the £11 million on fundraising, but given that nearly 3/4 of their income comes from donations (the rest mainly from grants – which still need to be chased) – one imagines that without this, they’d have considerably less to work with…

The stats really add up – Last year Water Aid  helped 1.5 million people gain access to clean water, and improved sanitation for 1.6 million people.

I think this type of aid is crucial – the UN recognises the importance of aid for clean water and to improve sanitation – A few facts to further convince you….

Incidentally, I’m raising money for water aid by running a half marathon this coming Sunday – You should sponsor me – £15 saves a life!


A Brief History of International Development Aid

I’m in the middle of writing a critique of Dambisa Moyo’s Dead Aid – mainly because the book uses highly selective evidence to promote neo0liberal ideology – but I will concede that the way Moyo conceptualises the history of development aid from the 1940s is a fairly useful teaching tool for A level Global Development – so here’s a brief summary of the second chapter of the book – (NB I said useful conceptually for A level, I’m not actually implying that her account is factually accurate – thankfully when you’ve got an exam board that lives in a 1980s timewarp, the actual facts aren’t necessarily that important for the exam)

Moyo splits ‘the history of aid’ up into ‘seven phases’ – starting with the earliest days of Bretton Woods in the mid 1940s – which saw the establishment of institutions such as the IMF, then outlines details of the Marshall Plan in the 1950s – but I’m going to start my brief summary with the third phase in the 1960s -which are followed in each successive decade with next four phases.

The 1960s – The decade of Industrialisation

The Kariba DamHere there was a shift to to the development of large scale industrial projects, with funding going directly to governments in African countries and coming primarily from the  USA, but also from European governments.

A good example of this is the Kariba hydroelectric dam that straddles the boarder between Zambia and Zimbabwe – began under British colonial rule in the 1950s and finally completed in 1977 at a cost of $480 million.

While pointing out that records from the 1960s are not perfect, Moyo sites the following stats for country receipts of aid by the mid 1960s –

  • Ghana – $90 million
  • Kenya, Malawi and Zambia – all having recieved an averge of about $315 million

The 1970s – the shift to a poverty focus

This historical period starts with the 1973 Arab embrago on oil, which lead to oil price rises, followed by food price rises and recession across Africa. In 1975, for example, Ghana’s eGDP contracted by 12% and inflaction had risen to more than 100% by 1977.

In practical terms this lead to aid being redirected away from large infrastructure projects and towrds rurual projects in agriculture and rural development and social services – such as innoculation programmes, housing and literacy campaigns. By the end of the 1970s, the proportion of aid allocated to social service had increased from 10% (in the previous decade) to over 50%. Much of this aid came in the form of concessional loans which would need to be paid back.

Moyo also notes that despite the increasing inflows of aid, increasing numbers of people in Africa were falling into poverty.

The 1980s: Neoliberalism, Structural Adjustment and the lost age of development

Moyo begins – By the end of the 1970s, Africa was awash with aid. In total, the continent had ammassed around $36 billion in foreign assistance. This decade saw a shift away from governments giving aid and towards multilateral aid – with the World Bank and the IMF playing a more central role. Also, aid became focussed less on poverty reduction and more focussed on assisting (some may read coercing) developing world governments to adopt free-market policies.

The 1979 oil spike, precipitaed by the Iran-Iraq war lead to more financial problems for Africa as Western financial institutions responded to the corresponding price increases by raising interest rates – which meant that Africa’s debt service payments reached around $8 billion in 1982, while at the same time, worldwide recession meant declining income from exports, meant that in the 1980s, 11 African countries were eventually defaulted on their debts.

The solution to this crisis was to ‘restructure the debt’. Thus the IMF formed the Enhanced Structural Adjustment Facility – to lend more money to defaulting nations to help them. Of course this in itself did little to actually alleviate Africa’s problems – it was still dependent on concessionary loans from the West.

At the same time as this restructuring – there was also an ideological shift amongst donors – towards ‘neoliberalism’ – and aid now shifted so that when governments received it they had to agree to instigate ‘free-market reforms’ – minimising the role of the state, privatising previously nationalised industries, liberalising trade (less restrictions on private companies and exports/ imports) and reducing the number of government employees.)

Between 1986 and 1996 six African countries – Benin, the CAR, Guineas, Madagascar, Mali and Uganda shed more than 10% of their civil workforce, and overall across Africa, many industries were privatised.

The 1990s – A question of good governance

By the end of the 1980s, emerging-market countries’ debt was at lest $1 trillion — and the cost debt servicing had become so substantial that from 1987-1989 there was a net outflow of money from poor to rich countries of $15 a year.

Having seen the failure of aid in previous decades, donor institutions now laid the blame for Africa’s economic woes at the door of weak political leadership and institutions and there was an increased focus on the need to link aid to the promotion of good governance – in other words, credible institutions, transparent rule of law and freedom from corruption. There was also a growing belief that African countries needed a dose of Western Democracy in order to develop.

Moyo also notes that the increasing link between aid and democratic accountability was aided by that fact that in the 1990s, the cold war was thawing, which meant an end to the US and Russia providing aid to politcally dubious regimes in Africa for military purposes.

Finally, the later part of the 1990s saw the rise of ‘donor fatigue’ – ODA peaked in 1992 at a high of $17 billion and then fell to £12 billion in 1999.

The 2000s – the rise of glamour aid

While I think her overview of the preceding decades of development aid is useful, her casting of ODA in the most recent decade is flippant. She

Bono (pronounced Bohnoh) 'feeding the world'

fails to even mention that aid targetting came to be better informed by the 8 Millennium Development Goals, or the new philanthropy headed up by Bill Gates. Instead Moyo simply casts the 2000s as the era in which a new army of moral campaigners took to our TV screens – most noteably Bono, who not only wrote the forward to Jeffrey Sach’s 2005 ‘End of Poverty’ but also met with world leaders to discuss development issue and campaing for more aid to combat Africa’s problems. The only other substantive example she mentions about aid in the 2000s is the ‘Jubilee debt campaign.

So there you have it – with the exception of the last decade, a useful, if somewhat generalised account of the history of Western Development aid over the last half century.

Statistical Overview of the Food Crisis – useful links

Click on the map for link to interactive version


What with the UK news focussing on the riots and the financial crisis, you may also have missed the fact that 12.5 million people are in need of urgent humanitarian assistance in Somalia, Ethiopia, Kenya and other countries in the region.

The World Food Programme has put together a very useful web site  to provide information on the famine with lots of links to how you can help – the most easiest way being to donate by text message

This Guardian Development Post looks at what countries are donating to the humanitarian relief effort – Unsurprisingly The USA is the biggest relief donor – having committed to provide approx. $0.5 billion but the UK as committed to providing around $160 million in humanitarian aid – making us one of the biggest donors per head of population.

This may sound like a lot of money – bur keep in mind that this is money committed not money yet spent, and also the UN notes that another $2.5 billion is needed to prevent half a million people from starving.

If you want to know more about hunger around the world – the World Hunger Index provides details of percentages of malnourished children around the world.



This Guardian podcast focusses on Somalia and provides details of what it’s like for some of those suffering from famine and the problems with mounting large scale aid programmes in the area.