Would Uganda be better off if the foreign aid stopped flowing?
Friday night Jeannie and I went out for a quick coffee with Andrew Mwenda, a prominent Ugandan journalist and provocateur. Four hours later, we tore ourselves away from one of the most interesting conversations we’ve had in ages (only because we had to pack up and get on a flight to London).
Andrew passionately and persuasively argues that foreign aid helps African governments postpone economic reforms and discourages the emergence of a transparent and accountable government. Uganda, which receives nearly half of its budget in aid, offers a perfect example, according to Andrew. His argument, if you’re interested, is laid out in a 2006 working paper for the Cato Institute.
More entertainingly, you can also view Andrew’s recent TED talk:
Andrew recently gave another talk at a European conference on development aid. The only African in attendance, he spoke first, just before Jeff Sachs. The title of his talk: “Please stop helping us.”
As you might imagine, Jeff was apoplectic. How I wish I had that video link.
I’m fairly sympathetic to Andrew’s point of view. His thesis is very close to one of my favorite books on African political economy, African Economies and the Politics of Permanent Crisis by Nicolas van de Walle. Drawing on careful case studies and a wealth of personal experience, van de Walle argues that aid can orient the government outwards (towards donors) rather than inwards (to its own citizens). He also argues that the parallel systems set up by NGOs and donors can undermine local government and make accountability and effectiveness worse. I highly recommend the book.
While sympathetic to both these views, I am as yet unconvinced that aid automatically has such deleterious effects. Most of all, I hate to lump all assistance into a single category of “aid”. Take a recent International Herald Tribune article describing how a massive vaccination campaign reduced deaths due to measles by 90 percent–from 360,000 in 2000 to 36,000 in 2006. How can a dollar invested in vaccine campaigns or trials be compared to a dollar of direct budget support, or a dollar of humanitarian relief? Such comparisons seem fruitless and futile. Clearly each affects the incentives and accountability of recipient-country governments differently.
This question is completely understudied in economics and politics, in my opinion. It is a paradigm just waiting to be shifted.