Accessibility links

Breaking News

Skeptic At African Econ Meeting Questions Benefits of Development Aid

A leading development aid skeptic has told a conference of African economists and academics the key to ending poverty in Africa is not better development strategies but greater individual liberty.

New York University Professor William Easterly stunned a conference dedicated to fostering development in Africa by saying, for the most part, development strategies don't work.

Much of this three-day gathering of development economists has been spent examining ways to fight poverty by making aid more effective.

Ethiopia's Prime Minister Meles Zenawi argued in his keynote address that African governments had been doing 'rather well' with poverty reduction strategies until the economic crisis hit last year.

Easterly counters that planners and strategists would do better to listen to the crowds of small and medium sized businesses that have traditionally been the engine of economic growth. He says the best plan is to have no plan. "I think way too much effort is wasted on the overall development strategy. Now does that mean there's nothing professionals and experts can do. No. I don't say that. What we learned from what we observe in successful development is that they depend not on the wisdom of a single individual but on the wisdom of the crowds. The crowds of entrepreneurs, political entrepreneurs, economic private sectors entrepreneurs, social entrepreneurs, aid entrepreneurs," he said.

Easterly is something of an odd man out at this conference of economic planners. He is author of two provocative books that examine why the more than $700 billion spent on foreign aid in Africa over the past 50 years has done so little to promote sustainable growth.

He says the main cause of poor performance is that most strategies are designed by foreign experts rather than by the people themselves. "One thing in common to all success is that they are all home grownprograms. They did not give power to outside experts. The guidance of the program was homegrown and not driven by foreign experts," he said.

Many conference participants expressed doubt home grown development schemes could thrive in Africa, where authoritarian regimes are commonplace and investors are wary. Easterly agrees it would be difficult to build a prosperous society in the absence of economic freedom. "In the long run, it does seem to be both necessary and sufficient to have political and economic liberty to achieve broad based development," he said.

Easterly said the record is clear that small and medium-sized businesses generate the jobs and demand that lift countries out of poverty. As examples, he pointed to Western Europe, the United States, and more recently East Asia, China and Eastern Europe. On the other hand, he says countries that received the most aid showed disappointing results.

As for the experts, he said they can be most useful when giving specific ideas to entrepreneurs about what works, and how it is done.