Brookings: Experts - William Easterly

What Works in Development? - Thinking Big and Thinking Small

Thu, 21 Jan 2010 14:30:00 -0500

Event Information

January 21, 2010
2:30 PM - 4:00 PM EST

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

In What Works in Development? (Brookings Press, 2009), Brookings Nonresident Fellow Jessica Cohen and Nonresident Senior Fellow William Easterly bring together leading experts to address one of the most basic yet vexing issues in development: what do we really know about what works—and what doesn't—in fighting global poverty? The authors focus on this key question and the ongoing debate over which paths to development truly maximize results.

On January 21, the Global Economy and Development program at Brookings hosted a discussion on these fundamental global development questions with the book’s editors. Their discussion focused on the benefits and challenges of both a smaller grassroots development approach and a traditional big-picture development approach, with the goal of achieving a consensus on how to best leverage limited resources and time in the race to lift the lives of the world’s poorest. Devex President and Co-founder Raj Kumar moderated the discussion.

Participants

Moderator

Raj Kumar

President and Co-founder, Devex

Panelists

The Civil War in Development Economics

William Easterly — Fri, 04 Dec 2009 00:00:00 -0500

Few people outside academia realize how badly Randomized Evaluation has polarized academic development economists for and against. My little debate with Sachs seems like gentle whispers by comparison.

Want to understand what’s got some so upset and others true believers? A conference volume has just come out from Brookings. At first glance, this is your typical sleepy conference volume, currently ranked on Amazon at #201,635.

But attendees at that conference realized that it was a major showdown between the two sides, and now the volume lays out in plain view the case for the prosecution and the case for the defense of Randomized Evaluation.

OK, self-promotion confession, I am one of the editors of the volume, and was one of the organizers of the conference (both with Jessica Cohen). But the stars of the volume are the speakers and commentators: Nana Ashraf (Harvard Business School), Abhijit Banerjee (MIT), Nancy Birdsall (Center for Global Development), Anne Case (Princeton University), Alaka Halla (Innovations for Poverty Action), Ricardo Hausman (Harvard University), Simon Johnson (MIT), Peter Klenow (Stanford University), Michael Kremer (Harvard), Ross Levine (Brown University), Sendhil Mullainathan (Harvard), Ben Olken (MIT), Lant Pritchett (Harvard), Martin Ravallion (World Bank), Dani Rodrik (Harvard), Paul Romer (Stanford University), and David Weil (Brown). Angus Deaton also gave a major luncheon talk at the conference, which was already committed for publication elsewhere. A previous blog discussed his paper.

Here’s an imagined dialogue between the two sides on Randomized Evaluation (RE) based on this book:

FOR: Amazing RE power lets us identify causal effect of project treatment on the treated.

AGAINST: Congrats on finding the effect on a few hundred people under particular circumstances, too bad it doesn’t apply anywhere else.

FOR: No problem, we can replicate RE to make sure effect applies elsewhere.

AGAINST: Like that’s going to happen. Since when is there any academic incentive to replicate already published results? And how do you ever know when you have enough replications of the right kind? You can’t EVER make a generic “X works” statement for any development intervention X. Why don’t you try some theory about why things work?

FOR: We are now moving in the direction of using RE to test theory about why people behave the way they do.

AGAINST: I think we might be converging on that one. But your advertising has not yet got the message, like the JPAL ad on “best buys on the Millennium Development Goals.”

FOR: Well, at least it’s better than your crappy macro regressions that never resolve what causes what, and where even the correlations are suspect because of data mining.

AGAINST: OK, you drew some blood with that one. But you are not so holy on data mining either, because you can pick and choose after the research is finished whatever sub-samples give you results, and there is also publication bias that shows positive results but not zero results.

FOR: OK we admit we shouldn’t do that, and we should enter all REs into a registry including those with no results.

AGAINST: Good luck with that. By the way, even if do you show something “works,” is that enough to get it adopted by politicians and implemented by bureaucrats?

FOR: But voters will want to support politicians who do things that work based on rigorous evidence.

AGAINST: Now you seem naïve about voters as well as politicians. Please be clear: do RE-guided economists know something the local people do not know, or do they have different values on what is good for them? What about tacit knowledge that cannot be tested by RE? Why has RE hardly ever been used for policymaking in developed countries?

FOR: You can take as many potshots as you want, at the end we are producing solid evidence that convinces many people involved in aid.

AGAINST: Well, at least we agree on the on the much larger question of what is not respectable evidence, namely, most of what is currently relied on in development policy discussions. Compared to the evidence-free majority, what unites us is larger than what divides us.

View the original posting on Aid Watch to comment.

Authors

William Easterly

Publication: Aid Watch

What Works in Development? : Thinking Big and Thinking Small

Jessica Cohen and William Easterly, eds. — Tue, 01 Dec 2009 00:00:00 -0500

Brookings Institution Press 2009 250pp.

What Works in Development? brings together leading experts to address one of the most basic yet vexing issues in development: what do we really know about what works -- and what doesn't -- in fighting global poverty?

The contributors, including many of the world's most respected economic development analysts, focus on the ongoing debate over which paths to development truly maximize results. Should we emphasize a big-picture approach -- focusing on the role of institutions, macroeconomic policies, growth strategies, and other country-level factors? Or is a more grassroots approach the way to go, with the focus on particular microeconomic interventions such as conditional cash transfers, bed nets, and other microlevel improvements in service delivery on the ground? The book attempts to find a consensus on which approach is likely to be more effective.

Contributors include Nana Ashraf (Harvard Business School), Abhijit Banerjee (MIT), Nancy Birdsall (Center for Global Development), Anne Case (Princeton University), Jessica Cohen (Brookings), William Easterly (NYU and Brookings), Alaka Halla (Innovations for Poverty Action), Ricardo Hausman (Harvard University), Simon Johnson (MIT), Peter Klenow (Stanford University), Michael Kremer (Harvard), Ross Levine (Brown University), Sendhil Mullainathan (Harvard), Ben Olken (MIT), Lant Pritchett (Harvard), Martin Ravallion (World Bank), Dani Rodrik (Harvard), Paul Romer (Stanford University), and David Weil (Brown).

Related Book Launch: What Works in Development? Thinking Big and Thinking Small. Thursday January 21, 2010.

Related Conference: What Works in Development? Thinking Big and Thinking Small. Thursday May 29 and Friday May 30, 2008.

ABOUT THE EDITORS

Jessica Cohen

William Easterly

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Ordering Information:

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The Poor Man's Burden

William Easterly — Wed, 07 Jan 2009 12:00:00 -0500

Editor's Note: Eighty years ago, a depression changed the way we think about poverty. It took decades for the world to recover and to remember that if people are given freedom, they will prosper. In an article in Foreign Policy Magazine, William Easterly reflects on lasting consequences of the original approach of "development economics" and cautions against returning to misguided plans to fight poverty.

Will Richard Fuld, the disgraced CEO of the now defunct Lehman Brothers, go down in history as the father of Bolivian socialism? If we learn the wrong lessons from the global financial Crash of 2008, he very well could.

That’s because the crash arrived at a crucial moment in the global fight to reduce poverty. For Bolivia—and so many other countries like it—the crash represents much more than a temporary downturn; it could mean the end of one of the greatest openings for prosperity in decades. Amid today’s gloom, it is easy to forget we have just witnessed half a century of the greatest mass escape from poverty in human history. The proportion of the world’s population living in extreme poverty in 2008 (those earning less than a $1 a day) was a fifth of what it was in 1960. In 2008, the income of the average citizen of the world was nearly three times higher than it was in 1960. But those tremendous gains are now in peril. For this crash hit many poor countries from Asia to Africa to Latin America that are still experimenting with political and economic freedom—but have yet to fully embrace it and experience its benefits. For decades, these countries have struggled tremendously to realize the potential of individual creativity as opposed to the smothering hand of the state. And it even seemed that the power of individual liberty might be winning.

It wasn’t happening because experts had handed out some blueprint for achieving economic growth to governments and then down to their people. What happened instead was a Revolution from Below—poor people taking initiative without experts telling them what to do. We saw such surprising success stories as the family grocer in Kenya who became a supermarket giant, the Nigerian women who got rich making tie-dyed garments, the Chinese schoolteacher who became a millionaire exporting socks, and the Congolese entrepreneur who started a wildly successful cellphone business in the midst of his country’s civil war. Perhaps not coincidentally, the share of countries enjoying greater levels of economic and political freedom steadily and simultaneously shot upward.

Then came the crash.

Today, global economic calamity risks aborting that hopeful Revolution from Below. As India’s Prime Minister Manmohan Singh warned late last fall, “It would be a great pity if this growing support for open policies in the developing world is weakened” because of the crash. Singh understands that the risk of a backlash against individual freedom is far more dangerous than the direct damage to poor countries caused by a global recession, falling commodity prices, or shrinking capital flows. We’re already seeing this dangerous trend in Latin America. In Bolivia, President Evo Morales has openly crowed about the failure of Fuld’s Lehman Brothers and other Wall Street giants: The capitalist “models in place are not a good solution for humanity . . . because [they are] based on injustice and inequality.” Socialism, he said, will be the solution—in Bolivia, the state “regulates the national economy, and not the free market.” The leaders of Argentina, Bolivia, Brazil, Ecuador, Nicaragua, Honduras, Paraguay, Venezuela, and even tiny Dominica to varying degrees align with these anticapitalist pretensions, all seemingly vindicated by the Crash of 2008. And it’s not confined to Latin America: Vladimir Putin blamed the U.S. financial system for his own populist mismanagement of Russia’s even more catastrophic crisis. A spreading fire of statism would find plenty of kindling already stacked in the Middle East, the former Soviet Union, Africa, and Asia. And there are many Western “development” experts who would eagerly fan the flames with their woolly, paternalistic thinking.

To Jeffrey Sachs, perhaps the foremost of these experts, the crash is an opportunity to gain support for the hopelessly utopian Millennium Development Goals of reducing poverty, achieving gender equality, and improving the general state of the planet through a centrally planned, government-led Big Push. “The US could find $700 billion for a bailout of its corrupt and errant banks but couldn’t find a small fraction of that for the world’s poor and dying,” he wrote in September. “The laggards in the struggle for the [goals] are not the poor countries ... the laggards are the rich world.” To Sachs and his acolytes, poor people can’t prosper without Western-country plans—and the crash only serves to turn Western governments inward. Therefore, progress on poverty is bound to suffer. To governments of poor countries that have failed to give their people the freedom needed to prosper, the neglect of Western governments is an easy excuse. So the gospel of Sachs and his disciples, though terribly condescending and wrongheaded, could attract many converts in the coming months.

A DEPRESSING HISTORY

At least we’ve been here before—and we have a chance to avoid the philosophical traps we fell into after the last calamity that did so much harm to our economic system. But so far, there have been strikingly similar reactions to the crashes of 1929 and 2008. In both cases, when stocks registered some of their largest percentage declines on record, highly leveraged firms and individuals who had placed large bets using complex financial securities that few understood lost everything. The failure of gigantic financial firms spread panic. Complaints about the greedy and reckless rich escalated; a shift toward protectionism and government interventionism appeared inevitable even where free markets once reigned supreme. Authoritarian populists abroad mocked the U.S. system. The catastrophe seemed to threaten democratic capitalism everywhere.

The difference is today we know that after a long and scary Great Depression, democratic capitalism did survive. And the U.S. economy returned to exactly the same long-run trend path it was on before the Depression.

We also know that, for another important part of the world, democratic capitalism did not hold up so well. In many ways, that failure stemmed from a misguided overreaction on the part of a new, influential field of economics that was highly skeptical of capitalism, was deeply traumatized by economic calamity, and considered much of the world “underdeveloped.” Born in the aftermath of the Depression, “development economics” grew on a foundation of bizarre misconceptions and dangerous assumptions.

This approach to poor-country development, promulgated by the economists who took up its cause in the 1950s, had four unfortunate lasting consequences, the effects of which we’re still reckoning with today in the midst of the latest big crash.

First, seeing Depression-style unemployment in every part of the world led these economists to assume that poor countries simply had too many people who were literally producing nothing. A U.N. report in 1951, produced by a group of economists, including future Nobel laureate Arthur Lewis, estimated that fully half of the farming population of Egypt produced nothing. The insulting assumption that poor people had “zero” productivity led these economists to think that individual freedoms for the poor should not be the foundation for wealth creation, as they had been during the Industrial Revolution, when the state had played a secondary, supportive role. And because governments seemed to successfully take on a larger role during the Depression, development economists assumed that granting extensive powers to the state was the surest path to progress. A 1947 U.N. report on development gave equivalent approval to state action in democratic capitalist countries like Chile, enslaved Soviet satellites like Poland, African colonies of the British and French, and apartheid South Africa, ignoring the vast differences in individual liberty between these places.

Second, these thinkers lost faith in bottom-up economic development that was “spontaneous, as in the classical capitalist pattern” (as a later history put it), preferring instead development “consciously achieved through state planning.” After all, the Five-Year Plans of the 1930s Soviet Union had avoided the Depression, at an appalling but then ignored cost in lives and human rights. This thinking was so universal that Gunnar Myrdal (who would later win a Nobel Prize in economics) claimed in 1956: “Special advisors to underdeveloped countries who have taken the time and trouble to acquaint themselves with the problem . . . all recommend central planning as the first condition of progress.”

Third, these economists grew to believe that the most important factor in reducing poverty was the amount of money invested in the tools to do so. After all, if there were simply too many people, they reasoned, the binding constraint on growth must be the lack of physical equipment. As a result, this line of economic philosophy would forever stress the volume of investment over the efficiency of using those resources; would be stubbornly indifferent as to whether it was the state or individuals who made the investments; would always stress the total amount of aid required to finance investment as the crucial ingredient in escaping poverty; and would ignore the role of a dynamic financial system in allocating investment resources to those private uses where they would get the highest return.

Fourth, the collapse of international trade during the Depression made development economists skeptical about trade as an engine of growth. So in Africa, for example, they pushed for heavy taxes on export crops like cocoa to finance domestic industrialization. In Latin America, Raúl Prebisch pushed import-substituting industrialization instead of export-led growth. This strategy was supposed to help developing countries in Africa and Latin America escape a presumed “poverty trap.” But the only “trap” it kept them out of was the greatest global trade boom in history following World War II, which fueled record growth in Asia, Europe, and the United States.

By the 1980s, the state-led plans had clearly failed. The wreckage of unsuccessful state enterprises, bankrupt state banks, and inefficient hothouse industries behind protectionist walls—all of which culminated in African and Latin American debt crises that destroyed growth—became too obvious to ignore. These factors, plus East Asia’s rise to power in global markets, finally fueled a counterrevolution in development thinking that favored free markets and individual liberty. By the new millennium, the long record of failure of the top-down development experts triggered a well-deserved collapse of confidence in top-down planning. It had taken nearly 50 years for the world to recognize the damage that the state-led, expert-directed, antifreedom agenda had done to the world’s poor. Today, the only remaining holdouts among the top-down experts are so utopian that they are safely insulated from reality.

A 5(0)-YEAR PLAN

Today, just when we were getting over the long, toxic legacy of the Depression and its misguided emphasis on statist plans to fight poverty, this financial crash threatens to take us back to the bad old days. To avoid such a return, we must keep some principles in mind.

First, we must not fall into the trap of protectionism—neither unilaterally nor multilaterally, neither in rich countries nor poor. Protectionism will just make the recession spread further and deeper, as it did during the Depression.

Second, when changing financial regulations to repair the excesses of the past several years, don’t strangle the financial system altogether. You can’t have a Revolution from Below without it. This lesson is especially salient as Washington bails out Wall Street banks and failing industries and intervenes in the U.S. financial sector to an unprecedented degree. This bailout might turn out to be the bitter medicine that saves “finance capitalism” from a stronger form of anticapitalism, but in developing countries, open economies are still an open question.

Third, keep slashing away at the enormous red tape that is left over from previous harebrained attempts at state direction of the economy. Learn from the combined dismal track record of state-owned enterprises but also from the unexpected success stories: Private entrepreneurs are far better than the government at picking industries that can be winners in the global economy. Although fierce opposition will be inevitable, to adopt these policies would be to turn the bad hand we’ve been dealt into an outright losing one.

Fourth, don’t look to economists to create “development strategies,” and don’t back up such experts with external coercion like IMF and World Bank conditions on loans. Such efforts will be either a waste of local politicians’ time or positively harmful. Jeffrey Sachs alone can take partial credit for the rise of two xenophobic rulers hostile to individual liberty—Evo Morales and Vladimir Putin—after his expert advice backfired in Bolivia and Russia. If like-minded experts couldn’t get it done in the 50 years after the Great Depression, they can’t do it in the next 50 years. Nothing in the current crash changes these common-sense principles.

DRIVING THE RIGHT WAY

In the coming months and years, the world’s economists, politicians, and average consumers could find it incredibly easy to fall again for the wrongheaded policies of the past century. But if we are truly to continue the miraculous exodus from poverty that was under way before this traumatic crash, we ought to keep in mind stories like that of Chung Ju-yung.

The son of North Korean peasant farmers, Chung had to leave school at 14 to support his family. He held jobs as a railway construction laborer, a dockworker, a bookkeeper, and a deliveryman for a rice shop in Seoul. At 22, he took over the rice shop, but it failed. He then started A-Do Service garage, but that failed, too. In 1946, at age 31, Chung tried once again to start an auto repair service in Seoul. At last, his enterprise succeeded, largely through the contracts he won to repair U.S. Army vehicles. As his success continued, Chung diversified into construction, and his company kept growing rapidly. In 1968, he started manufacturing cars.

He named his company Hyundai. It became one of the largest companies contributing to South Korea’s rise. His first effort to export cars to the United States in 1986 brought ridicule because of the cars’ poor quality. The Asian crisis of 1997-98 led to a partial breakup of the Hyundai Group, but the Hyundai Motor Company continues to thrive. Chung died in 2001, but his dreams for the U.S. market came true. By 2008, Hyundai cars had received awards in the United States for the highest level of quality from Consumer Reports.

However terrifying the latest crash may be, let’s never forget that it is the Chungs of the world that will end poverty—not the Depression-inspired regression into statism.

Authors

William Easterly

Publication: Foreign Policy Magazine

Foreign Aid Goes Military!

William Easterly — Thu, 06 Nov 2008 12:00:00 -0500

Vladimir Lenin wrote a pamphlet in 1916 called Imperialism: The Highest Stage of Capitalism: "Imperialism is capitalism at that stage of development at which...the division of all territories of the globe among the biggest capitalist powers has been completed."

Imagine Lenin's puzzlement if he were alive to see the territories of the globe divided up not among capitalists but among foreign aid bureaucrats. I am exaggerating a little; but a surprising new trend among development economists, foreign aid organizations, and Western policymakers is the willingness to combine foreign military intervention with traditional aid work. This takes even further a tendency that began in the 1980s toward increasing intrusiveness of foreign aid programs in poor societies' economic policies and political institutions. In short, foreign aid has been getting ever more imperial over the past quarter-century. While foreign aid may be squeezed by the current financial crisis, the aid-military complex seems likely to thrive in view of the many threats to security in different parts of the world. Indeed, on October 13, 2008, right after the worst week in US stock market history, World Bank President Robert Zoellick found time in a major speech to talk about how the World Bank was "bringing security and development together."

The US government has just established a regional military command in Africa, AFRICOM, which it justifies not as a military initiative but as part of a growing effort to promote African development. The head of the AFRICOM Transition Team, Rear Admiral Robert Moeller, said that "strategic success" for AFRICOM would be defined as "an African continent that knows liberty, peace, stability, and increasing prosperity," not to mention "democratic governance." The share of US foreign aid distributed by the Pentagon increased from 6 percent in 2002 to 22 percent in 2005.[1]

According to a new US Army manual released to the press on February 8, 2008, "shaping the civil situation" is as important to the Army's mission in foreign lands as "winning battles."[2] Under the rubric of "counterterrorism," the Department of Defense is constructing schools in coastal Kenya, and digging wells and manning health clinics throughout the Horn of Africa—at the same time as the American military has been backing Ethiopia's invasion of its bitter enemy Somalia.

Following the Bush administration's failures in using civilian experts in the occupation and reconstruction of Iraq, the US State Department, the traditional home of foreign aid policy, has been advocating bringing even more civilian experts into future military operations abroad. In a speech at Georgetown on February 12, Secretary of State Condoleezza Rice described the creation of a Civilian Reserve Corps, including economists, public administrators, public health officials, agronomists, and city planners who could

deploy with the 82nd Airborne within 48 hours of a country falling into conflict. These first responders would be able to summon the skills of hundreds of civilian experts across our federal government, as well as thousands of private volunteers.[3]

In 2005, a new State Department office called the Coordinator for Reconstruction and Stabilization published a list of its aims on its Web site. Soldiers and social scientists would work together to move a society from war to "legitimate and stable security institutions." They would work to "legitimate political institutions and participatory processes" and go on to a "long-term development program." They would achieve a "functioning legal system accepted as legitimate and based on international norms."

The Web site also listed 1,179 concrete steps the agency would take to carry out these goals. These include, for example, the need to "maintain positive relations with indigenous population," to "identify and dismantle organized crime networks," to "assess needs for prosthetic limbs in population," and to "improve drainage during road construction to reduce excessive runoff."[4] (The gap between these ludicrously ambitious goals and the pathetic aid outcomes in Iraq—is the power fully restored?—and Afghanistan raises the question of whether this development rhetoric is in part meant to improve PR for the military actions, an issue to which I will return.)

The British government has been thinking along similar lines. In a 2006 report, the British aid agency, the Department for International Development (DFID), announced:

The growing awareness of the linkages between conflict prevention and poverty reduction...and the importance attached to helping rebuild countries emerging from conflict all serve to emphasize the need for DFID to work effectively with the military.[5]

Then there is the United Nations, which currently has more than 100,000 peacekeeping soldiers deployed in nineteen conflicts. According to a UN report last year, the Blue Helmets are meant not only to foster peace but "are also mandated to support the restoration and enhancement of essential services...and help to tackle the root causes of conflict."[6] The entire UN system, including aid workers and peacekeepers, should work together on preventing deadly conflict and combating poverty.[7]

International aid organizations have also begun linking military intervention to fighting poverty. The World Bank was among the first when it suggested in a prominent 2003 report, Breaking the Conflict Trap, that aid combined with military action "could avert untold suffering, spur poverty reduction, and help to protect people around the world from...drug-trafficking, disease, and terrorism." The report suggested that such combined action could halve the probability of a civil war breaking out in a poor country from precisely 44 percent to 22 percent.[8]

This new approach to foreign aid has been encouraged, in part, by the concern of Western governments since September 11 that terrorist groups are emanating from war-torn, impoverished societies. But the influence of social scientists, building upon decades of thinking about poverty and development, should not be underestimated. The principal author of the 2003 World Bank report was Paul Collier, at that time head of the bank's Development Research Group, a noted Africanist, and one of the world's leading experts on civil war and the reconstruction of failed states. He has since returned to his longstanding professorship in economics at Oxford University, where he has written his new book, The Bottom Billion, which brings together for general audiences his academic research on the world's poorest countries. (He defines the "Bottom Billion" as the people living in "the minority of developing countries"—over fifty nations, mostly in sub-Saharan Africa and Central Asia—that are not developing but moving backward, and that occupy the lowest position in the global economy.)

The Bottom Billion is an eloquent and compassionate description of the plight of people in these countries and a plea for robust international intervention. Professor Collier's thesis is that the poorest countries are trapped in a vicious circle of poverty, civil war, military coups, looting of natural resources, and failed states. They need outside rescue by the rich nations. "The evidence is against...internal solutions," he writes, and "breaking the conflict trap and the coup trap are not tasks that these societies can readily accomplish by themselves." He closes each section with a list of recommendations for rescue actions by the Group of 8 rich nations.

Collier's recommendations are very specific and based on detailed cost/benefit calculations. For example, he writes:

Aid is not very effective in inducing a turnaround in a failing state; you have to wait for a political opportunity. When it arises, pour in the technical assistance as quickly as possible to help implement reform. Then, after a few years, start pouring in the money for the government to spend.

Regarding the use of force, he writes:

Security in postconflict societies will normally require an external military presence for a long time. Both sending and recipient governments should expect this presence to last for around a decade, and must commit to it. Much less than a decade and domestic politicians are liable to play a waiting game rather than building the peace.... Much more than a decade and citizens are likely to get restive for foreign troops to leave the country.

For Collier, "a credible military guarantee of external intervention" can achieve not only peace but also political stability. He is not discouraged by some of the recent difficulties faced by foreign armies, such as in Iraq. He points out that "the British intervention in Sierra Leone...has been a huge success." The lesson, for Collier, is that "we should intervene, but not necessarily everywhere. Sierra Leone rather than Iraq is the likely future of intervention opportunities in the bottom-billion countries." The foreign army should replace the local one:

International security forces should likewise be committed for the long haul. In return, postconflict societies should reduce their own military spending...it is dysfunctional.

The Bottom Billion, of course, is not only about foreign military intervention. It also discusses the trade policies of rich countries toward the poorest countries, international standards to block trade in "conflict diamonds"— diamonds that derive from mines controlled by rebel groups or factions, and that are used to fund military conflicts —and traditional foreign aid. Collier is not as optimistic about aid as Columbia Professor Jeffrey Sachs, who wrote a book about what he foresaw as the achievement of aid: The End of Poverty. Collier describes his own position as advocating a reasonable middle way between aid optimists and pessimists. However, Sachs in turn is often hostile toward foreign military intervention, so perhaps Collier is not so much in the middle as optimistic in a different direction. Military intervention is the most controversial tool that Collier wants to deploy according to his precise criteria for helping the poorest countries.

Where does this precision come from? To a social scientist, the world is a big laboratory. We have data on which societies have wars, how poor they are, which ones have military coups, which ones have military interventions, which ones get aid and of what kind, which ones export diamonds. We can calculate statistical associations among all of these factors. We can also do many case studies of war, peace, and nation-building. Collier is unusually confident for a social scientist that this data can be used as a guide to action:

We have, in fact, the building blocks for a system. The risk of conflict differs according to economic characteristics, and the economic characteristics are affected by conflict. It is possible to set up this interaction as a model that predicts in a stylized fashion how the incidence of conflict is likely to evolve. I joined forces with Harvard Hegre, a young Norwegian political scientist, and we built one.

Alas, as a social scientist using methods similar to Collier's in my research, I am painfully aware of the limitations of our science. When recommending an action on the basis of a statistical correlation, first of all, one must heed the well-known principle that correlation does not equal causation. There is a high correlation between wearing an expensive suit with cufflinks and being well-to-do, but putting on cufflinks does not make you rich. To establish a basic rationale for action, Collier would have to show that his correlations between actions and outcomes are causal, that actions cause outcomes.

The MIT economist Daron Acemoglu, recently the winner of the prestigious John Bates Clark Medal for best economist under forty, made exactly this criticism of the World Bank's research on civil war:

Contrary to the claims in the paper, the regression evidence does not test any well-specified hypothesis, and the correlations that are interpreted as causal effects are really no more than correlations.... It is too early to jump to policy conclusions.[9]

I am forced to make a similar criticism of Collier's book—he fails to establish that the measures he recommends will lead to the desired outcomes. In fairness to Collier, it is very difficult to demonstrate causal effects with the kind of data we have available to us on civil wars and failing states. As Collier writes, "our model cannot be used for prediction." In the research papers on which his book is based, Collier does give abundant caveats that show he understands the limits of correlations for inferring that actions cause outcomes. But the caveats are not as apparent in the book, and Collier does not explain to the reader just why he recommends precise actions so confidently on the basis of mere correlations.

Of course, governments take many actions even when social scientists are unable to establish that such actions will cause certain desirable outcomes. Presumably they use some kind of political judgment that is not based on statistical analysis. What is unusual about Collier's book is that he seems to offer statistical analysis as a replacement for political judgment, or perhaps unintentionally gives scholarly cover for actions that governments want to take anyway. The press shows a certain reverence for social science work with statistics that can make this cover quite effective. The paradox is that many social scientists familiar with this kind of analysis do not share the press's reverence.

This is not the end of the pitfalls of social science research that Collier encounters. An important part of his argument is that the Bottom Billion will not get out of poverty by themselves, because they are "trapped" by their pervasive wars, military coups, and looting of natural resource wealth. There certainly is an element of truth in this argument—all of these factors are undeniably inhibiting Africa's growth. But are those at the "bottom" literally trapped, waiting for outside rescue by the G-8?

Collier comes perilously close to another statistical fallacy known as selection bias. He chose the countries that belong to his Bottom Billion on the basis of their poverty today, and then points out that they also have had very poor growth during the preceding four decades—as has been the case, for example, with Angola, Haiti, Liberia, Sierra Leone, Somalia, and Zaire/ Congo. The implication is that the poorest nations will in the future continue to have very low economic growth.

But there is actually no evidence that the Bottom Billion at the beginning of a forty-year period will have worse economic growth over the subsequent forty years than rich nations. What Collier did was select which countries are poor at the end of the period, so of course they will also be the ones that previously have had a long string of very low growth rates—if they had previously had high economic growth, then they wouldn't be poor at the end.

Of course, Collier is quite right to show compassion for those countries that have had such negative growth as to wind up at the bottom today. Perhaps he worries that this negative record is likely to continue indefinitely. Yet the historical evidence suggests that this is an ungrounded assumption—growth reversals among poor nations are common in both directions. Côte d'Ivoire, Kenya, Nigeria, Togo, and Zimbabwe had good growth between 1960 and 1980, before falling prey to economic decline—brought on by political disasters and other factors—from 1980 to the present. Conversely, Bangladesh, India, Uganda, and Vietnam had mediocre to negative growth between 1960 and 1980, before registering impressive growth from 1980 to the present. If there is so much movement into and out of success and failure, it is hard to argue looking forward that the Bottom Billion are trapped in failure.

These may sound like arcane statistical debates when you are trying to decide whether to save a poor country. But if you are going to recommend military intervention based on social science research—in short, if you are going to read Collier's book and draw conclusions from it—then you have to face up to the technical fallacies that may lurk behind research findings. Alas, we have now seen two common fallacies appearing in the book, "correlation equals causation" (which spuriously concluded that UN peacekeeping forces cause peace) and "selection bias" (which made it appear that the Bottom Billion were trapped in low income and low growth, when no such conclusion is established by historical evidence).

These technical fallacies in Collier's analysis also raise questions concerning his conclusions about when and how to use military force or any other kind of foreign intervention. He illustrates his statistical results with anecdotal examples of military intervention, as we have already seen, as possible precedents for future military action. He strongly supports the widespread view that Western intervention could have prevented the 1994 Rwanda genocide. Rwanda is certainly a tragic case that discredits the inaction of the international community before and during the genocide. It is hard to consider the horrific killings that took place and not wish that there had been foreign military intervention there.

Yet the argument that the genocide could easily have been averted presumes that there was some benevolent rapid response force available that had full information about what was happening on the ground and was unconstrained by international politics. The tragedies of the last two decades have made clear that no such force now exists—whether in Rwanda, Bosnia, Somalia, or Darfur. On Darfur, we have now had years of activism, denunciations, and negotiations, and still no effective force in the field to protect civilians. There were UN peacekeepers in Rwanda at the time of the genocide, but they were hamstrung by doubts about whether what was occurring was genocide or a civil war and by great-power interests (especially the French, who backed the Hutus for a shamefully long period after the genocide began in order to preserve their Francophone sphere of influence in central Africa). In the end, the UN peacekeepers did nothing as the genocide occurred. Collier does not address the obstacles that have crippled efforts in recent years to build an international humanitarian rescue force.

So both statistical exercises and case study analysis give ambiguous direction on military intervention. I think the moral of the story is that, as tragic as poverty and violence are, social science does not have much to offer as a guide to using military force to stop them. This is not so surprising: Why should social scientists have any strategic expertise on whether a contingent of foreign or international troops will pacify a country easily (Sierra Leone) or with great difficulty, or not at all (Somalia)? It is regrettable if social science is used to give spurious cover to military intervention. There may indeed be cases where humanitarian intervention is desirable. But nobody should rush to embrace the new aid imperialism, in which soldiers and aid workers are supposed to intervene together in a poor society, on the basis of social science research like that presented in The Bottom Billion.

Although the kind of social science deployed by Collier offers little guidance on military intervention, that doesn't mean that nothing insightful can be said about it. There has already been an extensive debate among thoughtful writers on the subject, to which Collier pays scant attention. This debate is far from resolved, yet it does make clear that humanitarian intervention is not the apolitical and clean exercise Collier envisions, but extremely political and messy. Aid groups like Doctors Without Borders (Médecins Sans Frontières, or MSF) have complained that military intervention (or even the threat of such intervention) fatally compromises the neutrality of humanitarian aid workers, thus restricting their access to needy people, and sometimes putting the aid workers in danger. In Somalia, attacks on aid workers increased after American troops arrived. Aid workers were expelled from Kosovo after NATO started bombing Serbia. Pro-Indonesian militias in East Timor attacked humanitarian workers because they saw them as favoring East Timor's secession.

In the initial invasion of Afghanistan in 2001, the military's dispensing of aid made it hard to tell the difference between military and nonmilitary aid workers, and the latter had to temporarily withdraw in the face of violence. And in recent months, as Afghanistan descends further into full-scale civil war, aid workers have lamented what they call the "securitization" of US development and reconstruction assistance, according to which most US aid has been channeled to some of the principal areas of military conflict in the south where it has little effect, rather than to more stable areas that have capacity for development. "How will the Afghan population know in the future if an offer of humanitarian aid does not hide a military operation?" asked MSF's Dr. Jean-Hervé Bradol.

These warnings seem even more tragically prescient after the recent assassinations in Afghanistan of three expatriate International Rescue Committee workers on August 13, 2008, and of a British aid worker on October 20, 2008. "We have seen many times before, for example in Somalia, the problems caused for both the vulnerable population and for aid agencies when the military try to both fight a war and deliver aid at the same time."[10]

In Darfur, advocacy by NGOs of military action against the Sudanese government has led that government to refuse to grant those NGOs access to Darfuri refugees. Both pro- and anti-government forces have physically or sexually assaulted or even killed aid workers because of their perceived complicity with military operations. This is particularly unfortunate because Darfur badly needs humanitarian workers to prevent the 70 percent of deaths that are caused by disease and malnutrition, not violence. The Save Darfur coalition called for a "no-fly" zone in Darfur even though it would have put humanitarian aid flights in danger.

As far as ending the Darfur tragedy, the Darfur expert and veteran humanitarian worker Alex de Waal notes that the diplomatic energies of the United States and its allies have been consumed by the "clamor for UN troops," that such a force would not be adequate to protect civilians anyway, and that the clamor is "diverting efforts from achieving a peace agreement that was within grasp...but has now slipped away."[11]

Moreover, once blanket endorsement of a humanitarian war is given, what is to prevent a great power from using that endorsement as cover for a war it pursues for its own reasons? Many humanitarian advocates accepted the Kosovo war, but then US Secretary of State Colin Powell was able to claim in October 2002 that the United States had the same authority to use force in Iraq that it had in Kosovo. Critics later wondered whether the Kosovo operation was motivated as much by NATO strategy designed to isolate Serbia in Europe as by the plight of the Kosovars. UN peacekeeping deployments are also controlled by the great powers at the Security Council. Developing countries have been a lot less enthusiastic than great powers about giving those powers a blank check to invade any country they define as a human rights violator. The Filipino activist Walden Bello said that "you begin with a Haiti or a Kosovo, and you end up with an Iraq."

I confess that I am still moved as much as anyone else by the compassionate case for saving civilians from horrific violence. But we have to ask the tough questions: Even if the war proceeds from humanitarian motives, does it actually have humanitarian consequences? It's not so simple. The guarantee of international protection may cause civilians at risk to let down their guard, and then tragedy ensues when the guarantee turns out to be an empty one (Srebrenica, Rwanda). The political scientist Alan Kuperman points out that killers are much quicker than interveners—in Bosnia, most ethnic cleansing happened in the spring of 1992 before the Western press was even paying attention.

Kuperman also argues that the hope of international intervention may embolden rebels to undertake military action that will inevitably catch many civilians in the crossfire between the rebels and the government before the interveners arrive. This is exactly what happened with the Kosovo Liberation Army (KLA), whose members admitted in interviews with Kuperman that their violence against Serbs starting in 1997 was motivated by hopes of foreign intervention. What's more, Western military strategists may unintentionally favor violent over nonviolent resistance movements. The West ignored a nonviolent Kosovar resistance movement for eight years, and then rewarded the violent KLA with military backing in the NATO Kosovo war.

A larger-scale Western military intervention may lead to an escalation of violence on all sides and much more loss of civilian life. As Columbia professor of government Mahmood Mamdani wonders, "Why should an intervention in Darfur not turn out to be a trigger that escalates rather than reduces the level of violence as intervention in Iraq has done?"[12] University of Chicago law professor Eric Posner points out that a smart tyrant can foil a humanitarian invasion by using civilians as human shields, inducing the invaders to kill those they are trying to save (remember Somalia?).[13]

One should never say never—there may be cases where foreign forces can rescue innocents from horrors. But as generalized doctrine, as Alex de Waal says eloquently, "philanthropic imperialism is imperial nonetheless." In the end, one cannot hide all the political and ethical complexities of foreign military intervention behind a neutral façade of Collier-type statistical analysis. The hubris of the military imperialists was bad enough without adding to it the hubris of the aid imperialists.

Notes

[1]Center for Global Development, "The Pentagon as a Development Agency?" Q&A with Stewart Patrick, February 11, 2008, at www.cgdev.org/content/opinion/detail/15359.

[2]International Herald Tribune, February 8, 2008.

[3]"Remarks on Transformational Diplomacy," at www.state.gov/secretary/rm/2008/02/100703.htm. See also John E. Herbst, "Briefing on Civilian Stabilization Initiative," February 14, 2008, at www.state.gov/s/crs/rls/rm/100913.htm.

[4]Office of the Coordinator for Reconstruction and Stabilization, "Post-Conflict Reconstruction: Essential Tasks Matrix," April 1, 2005, at www.state.gov/s/crs/rls/52959.htm.

[5]Department for International Development, "Quick Impact Projects: A Handbook for the Military," June 2006, at www.dfid.gov.uk/pubs/files/qip/booklet.pdf.

[6]"UN Peacekeeping Overview 2007: Excerpts from the Report of the Secretary-General on the Work of the Organization," www.un.org/Depts/dpko/SGreport.pdf.

[7]UN Secretary-General's report, "In Larger Freedom," September 2005.

[8]World Bank, Breaking the Conflict Trap: Civil War and Development Policy, June 2003, p. 168.

[9]Acemoglu was commenting on Paul Collier and Nicholas Sambanis, Understanding Civil War, Vols. 1 and 2 (World Bank, 2003). The comments came as part of a 2006 evaluation by academic economists (led by Angus Deaton of Princeton) of the World Bank's research, including that on civil war. The evaluation characterized the World Bank's work as a case in which "an important and promising topic was marred by poor execution." See An Evaluation of World Bank Research, 1998–2005, September 24, 2006, p. 64. Nevertheless, the World Bank Web site today notes that "in 2005, following on the success of the Economics of Civil War project, the World Bank launched the Post- Conflict Transitions research project." The hubris of social scientists working for aid agencies like the World Bank and the hubris of military interventionists seem to be reinforcing each other.

[10]Médecins Sans Frontières, "MSF Rejects Link of Humanitarian and Military Actions," October 8, 2001.

[11]"No Such Thing as Humanitarian Intervention: Why We Need to Rethink How to Realize the 'Responsibility to Protect' in Wartime," Harvard International Review, March 21, 2007.

[12]"The Politics of Naming: Genocide, Civil War, Insurgency," London Review of Books, March 8, 2007.

[13]"The Humanitarian War Myth," The Washington Post, October 1, 2006.

Authors

William Easterly

Publication: The New York Review of Books

Can the West Save Africa?

William Easterly — Fri, 31 Oct 2008 12:00:00 -0400

Introduction

The last few years have seen unprecedented attention to an attempt by Western governments to rapidly develop Africa. British Prime Minister Tony Blair called at the World Economic Forum in Davos in January 2005 for “a big, big push forward” in Africa to end poverty, financed by an increase in foreign aid. Tony Blair commissioned a Report on Africa, which released its findings in March 2005, likewise calling for a “big push.” Gordon Brown and Tony Blair put the cause of ending poverty in Africa at the top of the agenda of the G-8 Summit in Gleneagles, Scotland in July 2005. In the 2005 summit at Gleneagles, Scotland, the G-8 agreed to double foreign aid to Africa, from $25 billion a year to $50 billion to finance the big push, as well as to forgive the African aid loans contracted during previous attempts at a “big push.” Two years later, Germany again made Africa an important item on the agenda of the G-8 summit it hosted in Heiligendamm in June 2007. There, the G-8 again reiterated the promises made in 2005. Japan pledged to double its own aid to Africa in May 2008 over the next five years. Most recently, the G8 Summit in Japan in July 2008 agreed: “We are firmly committed to working to fulfill our commitments on Official Development Assistance made at Gleneagles, and reaffirmed at Heiligendamm, including increasing…ODA to Africa by US$ 25 billion a year by 2010.”

The goals of the Western effort are ambitious, not limited to promoting overall economic growth. A 2000 UN Summit agreed upon “Millennium Development Goals” (MDGs) for the year 2015 such as cutting poverty in half, reaching universal primary enrollment, sharply reducing mortality of infants and mothers, achieving gender equality, dramatically increasing access to clean water and other social indicators. Although this effort is worldwide, most of the MDG campaign focuses on Africa, where the shortfalls to the goals are the greatest.

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William Easterly

Development Doesn't Require Big Government

William Easterly — Fri, 03 Oct 2008 12:00:00 -0400

Financial meltdown will not cause the U.S. to abandon democratic capitalism, but the outcome is less clear for countries deciding whether capitalism is the best system. In many of these countries the choice is not between light and heavy financial regulation, but between relying on creative individuals or government planners to escape poverty.

Some countries are already taking the wrong prescriptions from recent events. Honduran President Manuel Zelaya told the U.N. General Assembly last month that the lesson of the crash was "the market's laws were demonic, satisfying only the few." Paraguayan President Fernando Lugo said the "market mechanism" and "immoral speculation" were a mistake. Brazilian President Luiz Inácio Lula da Silva Lula added that speculators have "spawned the anguish of entire peoples" and Brazilians needed "indispensable interventions by state authorities."

We have been here before. Development economics -- the study of how poor countries can become rich -- was forever cursed by the timing of its birth after the Great Depression. That gave development economics a bias toward relying on governments, rather than markets, to create growth. The early development economists ignored a century and a half of European and North American development through individual enterprise, remembering only that their governments forcefully intervened to stimulate output during the 1930s.

What is widely agreed to be the seminal article in development economics appeared in 1943, calling poor countries "depressed areas." The Economic Journal article by Paul Rosenstein-Rodan, "Problems of Industrialization of Eastern and South-Eastern Europe," concluded that a fourth of the population of these countries was unemployed, and the solution rested in ceding development to the state. Development comes from state-planned investment in all sectors at once, the "Big Push," not reliance on private investors: "An individual entrepreneur's knowledge of the market is . . . insufficient," because he cannot have all the data "available to the planning board."

Similarly, the U.N.'s Depression mindset prompted them to ask an expert commission led by Sir Arthur Lewis in 1950 to prepare a report on unemployment in underdeveloped countries. Its report concluded that "economic progress depends to a large extent upon the adoption by governments of appropriate . . . action," and that political leaders must have a strategy for such growth, reflecting "the facts of each particular case."

Few at the time disagreed. Oxford economics professor S. Herbert Frankel wrote a rare protest in 1952. He believed poor, ordinary people had "peculiar aptitudes for solving the problems of their own time and place," a confidence later vindicated by homegrown success in Botswana, the East Asian tigers, India, Chile, Turkey and China.

Lewis later received a Nobel Prize in Economics. Poor Frankel was basically forgotten.

Development economics still bears the scars of the Depression. A prominent World Bank Growth Commission concluded in May that "fast, sustained growth does not happen spontaneously. It requires a long-term commitment by a country's political leaders," and "each country has specific characteristics and historical experiences that must be reflected" in the leaders' "growth strategy." Some at the U.N. still recommend the discredited Big Push strategy of state-planned investment.

How much poverty has endured because individual entrepreneurs were shunned in favor of the likes of the $5 billion state-owned Ajaokuta Steel Mill in Nigeria, which never produced a bar of steel? Or because African governments spend their time preparing World Bank-required national Poverty Reduction Strategy Reports instead of freeing space for innovators?

We will never know. But we do know that the free market has a long-run track record of creating prosperity -- even with the occasional crash. The Depression's deceptive intellectual legacy is that development flows from all-knowing states rather than creative individuals. Here's hoping that the backlash to today's crash will not spawn another round of bad economics for the poor.

Authors

William Easterly

Publication: The Wall Street Journal

Best and Worst Practices in Foreign Aid

Tobias Pfutze and William Easterly — Thu, 19 Jun 2008 12:00:00 -0400

Editor’s Note: June 26, 2008: In response to this working paper, Brookings received comments from some of the aid agencies that were reviewed as part of Easterly and Pfutze’s research and suggested rankings. Since Brookings’ working papers are intended to foster discussion of current policy issues, we have posted the responses received below (with permission) in order to further the debate, and offer additional views on the scholars’ proposed criteria and rankings.

Response from the World Food Program »

Response from William Easterly and Tobias Pfutze »

Abstract

This paper does not address the issue of aid effectiveness—that is, the extent to which foreign aid dollars actually achieve their goals—but instead focuses on “best practices” in the way in which official aid is given, an important component of the wider debate. First, we discuss best practice for an ideal aid agency and the difficulties that aid agencies face because they are typically not accountable to their intended beneficiaries. Next, we consider the transparency of aid agencies and four additional dimensions of aid practice: specialization, or the degree to which aid is not fragmented among too many donors, too many countries, and too many sectors for each donor); selectivity, or the extent to which aid avoids corrupt autocrats and goes to the poorest countries; use of ineffective aid channels such as tied aid, food aid, and technical assistance; and the overhead costs of aid agencies. We compare 48 aid agencies along these dimensions, distinguishing between bilateral and multilateral ones. Using the admittedly limited information we have, we rank the aid agencies on different dimensions of aid practice and then provide one final comprehensive ranking. We present these results as an illustrative exercise to move the aid discussion forward.

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Tobias Pfutze
William Easterly

6.7 Billion Secrets of Development

Thu, 05 Jun 2008 08:30:00 -0400

Event Information

June 5, 2008
8:30 AM - 10:00 AM EDT

The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

The Global Economy and Development program at Brookings hosted the third meeting of its Global Young Professionals Program on June 5. The briefing brought together over 90 young professionals—the next generation of leaders working in the fields of global economics and development. The breakfast featured William Easterly, distinguished economist and development expert, who presented on 6.7 Billion Secrets of Development which brought to light the failure of many development “experts” to inspire economic growth and promoted social entrepreneurship and bottom-up development as a means to successful growth creation.

William Easterly is a visiting fellow with Brookings Global, and professor of economics at New York University, joint with Africa House, and co-director of NYU's Development Research Institute. He is a research associate of the National Bureau of Economic Research. He is also a non-resident fellow of the Center for Global Development.

William Easterly received his Ph.D. in economics at MIT. He spent 16 years as a research economist at the World Bank. He is the author of The White Man's Burden: How the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good (Penguin, 2006); The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics (MIT, 2001); four other co-edited books; and 59 articles in refereed economics journals. His work has been discussed in numerous media outlets worldwide. Foreign Policy magazine named him one of the world's Top 100 Public Intellectuals in 2008.

Easterly's areas of expertise are the determinants of long-run economic growth; the political economy of development; and the effectiveness of foreign aid. He has worked in most areas of the developing world, most heavily in Africa, Latin America and Russia. Easterly is an associate editor of the Quarterly Journal of Economics, the Journal of Economic Growth, and of the Journal of Development Economics.

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Raji Jagadeesan

Global Economy and Development

Panelists

What Works in Development? Thinking Big and Thinking Small

Thu, 29 May 2008 13:00:00 -0400

Event Information

May 29-30, 2008

The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

Bill Easterly and Jessica Cohen of Brookings recently convened a conference with leading development experts to explore one of the most vexing issues of global development: what do we really know about what works and what doesn’t when fighting global poverty? The conference focused on the ongoing debate over which paths to development really maximize results: a big-picture approach focusing on the role of institutions, macroeconomic policies, growth strategies and other country-level factors; or a more grassroots approach focusing on particular microeconomic interventions such as conditional cash transfers, bed nets, teaching materials and other micro-level improvements in service delivery on the ground. The conference objective was to shed light on both schools of thought, with the goal of achieving a consensus on how to best leverage limited resources and time in the race to lift the lives of the world’s poorest.

Related Book: What Works in Development? Thinking Big and Thinking Small

The related conference papers detail critical lessons from development experiences and propose new ways of tackling some of the toughest issues.

View the conference agenda »

DRAFT CONFERENCE PAPERS:

The New Development Economics: We Shall Experiment, But How Shall We Learn?
Author: Dani Rodrik (Harvard University, Kennedy School of Government)
Discussants: Sendhil Mullainathan (Harvard University) & Martin Ravallion (World Bank)
Breaking Out of the Pocket: Do Health Interventions Work? Which and in What Sense?
Authors: Simon Johnson (International Monetary Fund) & Peter Boone (London School of Economics, Centre for Economic Performance)
Discussants: Anne Case (Princeton University) & Jessica Cohen (Brookings Institution)
Pricing and Access: Lessons from Randomized Evaluations in Education and Health
Author: Michael Kremer (Harvard University and the Brookings Institution)
Discussants: David Weil (Brown University) & Paul Romer (Stanford University)
The Policy Irrelevance of the Economics of Education: Is ‘Normative as Positive’ Just Useless, or is it Worse?
Author: Lant Pritchett (Harvard University, Kennedy School of Government)
Discussants: Ben Olken (Massachusetts Institute of Technology) & Nancy Birdsall (Center for Global Development)
High Bandwidth Economic Policies: Strategies To Speed Up Productive Transformation
Author: Ricardo Haussman (Harvard University, Kennedy School of Government)
Discussants: Nava Ashraf (Harvard University Business School) & Ross Levine (Brown University)
Big Answers For Big Questions: The Illusions of Macroeconomics
Author: Abhijit Banerjee (Massachusetts Institute of Technology)
Discussants: Peter Klenow (Stanford University) & William Easterly (NYU and Brookings Institution)

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Participants

Panelists

Dani Rodrik

Harvard University, Kennedy School of Government

Simon Johnson

International Monetary Fund

Peter Boone

London School of Economics, Centre for Economic Performance

Lant Pritchett

Harvard University, Kennedy School of Government

Ricardo Haussman

Harvard University, Kennedy School of Government

Abhijit Banerjee

Massachusetts Institute of Technology

Trust the Development Experts – All 7 Billion

William Easterly — Wed, 28 May 2008 12:00:00 -0400

The report of the World Bank Growth Commission, led by Nobel laureate Michael Spence, was published last week. After two years of work by the commission of 21 world leaders and experts, an 11- member working group, 300 academic experts, 12 workshops, 13 consultations, and a budget of $4m, the experts’ answer to the question of how to attain high growth was roughly: we do not know, but trust experts to figure it out.

This conclusion is fleshed out with statements such as: “It is hard to know how the economy will respond to a policy, and the right answer in the present moment may not apply in the future.” Growth should be directed by markets, except when it should be directed by governments.

My students at New York University would have been happy to supply statements like these to the World Bank for a lot less than $4m.

Why should we care about the debacle of a World Bank report? Because this report represents the final collapse of the “development expert” paradigm that has governed the west’s approach to poor countries since the second world war. All this time, we have hoped a small group of elite thinkers can figure out how to raise the growth rate of a whole economy. If there was something for “development experts” to say about attaining high growth, this talented group would have said it.

What went wrong? Experts help as long as there are useful general principles, such as could be established by comparing low-growth and high-growth countries. The Growth Commission correctly pointed out that such an attempt to find secrets to growth has failed. The Growth Commission concluded that “answers” had to be country specific and even period specific. But if each moment in each country is unique, then experts cannot learn from any other experience – so on what basis do they become an “expert”?

The logical next step at this point would have been to give up on experts. But the commission insists that experts, who will communicate their advice to technocratic leaders, are still the answer. Partly this reflects how wedded the World Bank is to the “leaders and experts” vision of how growth happens, since such a world-view does create a big role for World Bank experts.

The commission made the common mistake of anointing high growth rates as the measure of success, whereas high growth mysteriously comes and goes. Indeed, only two of the 13 high-growth episodes the commission studied were still going at the time of the study. Yesterday’s growth failures (for example India) are today’s successes and yesterday’s growth successes (for example Brazil) are today’s failures. Much of this volatility is inexplicable and unpredictable. To give credit to whatever leader happens to be in power during a burst of high growth is just circular reasoning (How do we know they were a great leader? Because there was high growth!).

The details of success are equally unpredictable. Where are the experts who guessed in advance that an obscure Indian company making edible oils would become a $10bn-plus company (Wipro) providing information technology services and call centres? Or that a lossmaking Brazilian state enterprise (Embraer) would go on to capture a lot of the world market for regional jets after being privatised? Or that South Korean entrepreneurs would create a carmaker (Hyundai) with greater market value than General Motors or Ford? Or that a schoolteacher named Dong Ying Hong, formerly earning $9 a month in Datang, China, would become a millionaire making socks?

What to do in a world of such unpredictability? There are some general principles and they do not require experts. Another Nobel laureate gave the crucial insight a long time ago – the answer is freedom for multitudinous individuals to figure out their own answers. Friedrich Hayek said: “Liberty is essential to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realising many of our aims. It is because every individual knows so little and ... because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.”

The evidence for this vision is not found in those baffling fluctuations of growth rates, it is in the levels of development attained in the long run. Confirming Hayek, systems that give more liberty to individuals – featuring both more economic and political freedoms – are associated with much less poverty. The evidence for this comes from both history (for example old, despotic, poor Europe compared with modern, free, rich Europe) and cross-country comparisons (for example South Korea compared with North Korea, former West Germany compared with East, New Zealand compared with Zimbabwe). This alternative paradigm has a much smaller role for experts, because experts cannot direct or impose freedom from the top down (or else it would not be freedom).

The end of the “development expert” paradigm does not mean the end of hope for development. Development is already gradually ending poverty (global poverty rates have fallen by more than half in the past three decades) – not be- cause of development experts such as those who wrote the World Bank Growth Commission report – but thanks to more freedom for more of the 6.7bn individual development experts alive today.

Authors

William Easterly

Publication: The Financial Times

Is the Brain Drain Good for Africa?

William Easterly and Yaw Nyarko — Mon, 31 Mar 2008 12:00:00 -0400

ABSTRACT

We build upon recent literature to do several exercises to assess benefits and costs of the brain drain to Africa. Contrary to a lot of the worries expressed in the media and in aid agencies, the brain drain is probably a net benefit to the source countries. We make several arguments: (1) the African brain drain is not large enough to have much effect on Africa’s skill gap relative to the rest of the world. Since other regions had a larger brain drain, the skill gap between Africa and the rest would actually be larger in a counterfactual world of NO brain drain with the same amount of skill creation. (2) The gains to the migrants themselves and their families who receive indirect utility and remittances more than offset the losses of the brain drain. According to one of our calculations, the present value of remittances more than covers the cost of educating a brain drainer in the source country. (3) Brain drain has a positive effect on skill accumulation that appears to offset one for one the loss of skills to the brain drain. Hence it is not surprising that we fail to identify any negative growth effect of the brain drain. Although some of our exercises are reliant on special assumptions and shaky data that require further investigation, we conclude based on what we can know in this paper that the brain drain is on balance good for Africa.

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William Easterly
Yaw Nyarko

Are the Millennium Development Goals Unfair to Africa?

Wed, 06 Feb 2008 11:30:00 -0500

Event Information

February 6, 2008
11:30 AM - 1:30 PM EST

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

The United Nations Millennium Development Goals (MDGs) call for cutting extreme poverty in half, reducing child mortality by two-thirds, halting the spread of HIV/AIDS, and achieving universal primary education by 2015. The UN MDG Report 2007 says we are well on our way towards meeting the needs of the world’s poorest -- except for Africa. Those reporting on MDGs say that sub-Saharan Africa is not on track to meet any of these goals.

On February 6, the Brookings Institution and the Center for Global Development hosted Professor William Easterly for a presentation of his recent paper, "How the Millennium Development Goals Are Unfair to Africa." Easterly discussed his analysis that most African countries’ predicted failure will result more from the design of the goals and how they are measured than from unique deficiencies in Africa’s development process. Nancy Birdsall, president of the Center for Global Development, moderated, and Danny Leipziger of the World Bank provided his view of the relationship between the MDGs and Africa.

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Participants

Moderator

Nancy Birdsall

President, Center for Global Development

Panelists

Danny Leipziger

Vice President, Poverty Reduction and Economic Management, World Bank

Superpower Interventions and Their Consequences for Democracy

Daniel Berger, Shanker Satyanath and William Easterly — Wed, 30 Jan 2008 00:00:00 -0500

ABSTRACT

Do superpower interventions to install and prop up political leaders in other countries subsequently result in more or less democracy, and does this effect vary depending on whether the intervening superpower is democratic or authoritarian? While democracy may be expected to decline contemporaneously with superpower interference, the effect on democracy after a few years is far from obvious. The absence of reliable information on covert interventions has hitherto served as an obstacle to seriously addressing these questions. The recent declassification of Cold War CIA and KGB documents now makes it possible to systematically address these questions in the Cold War context. We thus develop a new panel dataset of superpower interventions during the Cold War. We find that superpower interventions are followed by significant declines in democracy, and that the substantive effects are large. Perhaps surprisingly, once endogeneity is addressed, US and Soviet interventions have equally detrimental effects on the subsequent level of democracy; both decrease democracy by about 33%. Our findings thus suggest that one should not expect significant differences in the adverse institutional consequences of superpower interventions based on whether the intervening superpower is a democracy or a dictatorship.

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Daniel Berger
Shanker Satyanath
William Easterly

How the Millennium Development Goals Are Unfair to Africa

William Easterly — Fri, 30 Nov 2007 12:00:00 -0500

View an updated version, published by World Development, Vol. 37, No. 1, 2009.

INTRODUCTION

One of the centerpieces of foreign aid efforts in the new millennium has been the effort to attain seven Millennium Development Goals (MDGs) for developing countries by the year 2015, representing progress on a range of economic and social indicators. These goals were first agreed at a summit of virtually all world leaders at the United Nations (UN) in 2000, and they have since occupied a great deal of the attention of the UN, World Bank, International Monetary Fund, and bilateral aid agencies in their dealing with low-income countries.

The world as a whole will meet most of the goals, as will most regions. However, the MDG campaign has emphasized the failure of Sub-Saharan Africa compared to other regions. Those involved in the MDG effort have been virtually unanimous that Sub-Saharan Africa stands out in that it will not meet ANY of the goals, as the following quotes attest:

“Africa…is the only continent not on track to meet any of the goals of the Millennium Declaration by 2015.”
(UN World Summit Declaration, 2005)

“in Africa… the world is furthest behind in progress to fulfill [the MDGs]...Africa is well behind target on reaching all the goals.” (Blair Commission for Africa 2005)

“Sub-Saharan Africa, which at current trends will fall short of all the goals.” (p. xi, foreword by James Wolfensohn and Rodrigo de Rato, World Bank and IMF Global Monitoring Report 2005)

“Sub-Saharan Africa, most dramatically, has been in a downward spiral of AIDS, resurgent malaria, falling food output per person, deteriorating shelter conditions, and environmental degradation, so that most countries in the region are on a trajectory to miss most or all of the Goals… The region is off track to meet every Millennium Development Goal.” (p. 2, 19 UN Millennium Project, Investing in Development, Main Report, 2005)

“At the midway point between their adoption in 2000 and the 2015 target date for achieving the Millennium Development Goals, sub-Saharan Africa is not on track to achieve any of the Goals.” (United Nations, Africa and the Millennium Development Goals, 2007)

“However, at the mid point of the Millennium Development Goals (MDGs), sub-Saharan Africa is the only region which, at current rates, will meet none of the MDG targets by 2015.” Africa Progress Panel (follow-up to Blair Commission for Africa, communiqué, 2007)

The World Bank makes the same point graphically in figures displayed prominently on its MDG website as of July 2007, shown as Figure 1. Similar pictures are shown in the Global Monitoring Report 2007 by World Bank and IMF, showing Africa to be more off-track than other regions.

This paper argues that the MDGs are poorly and arbitrarily designed to measure progress against poverty and deprivation, and that their design makes Africa look worse than it really is. The paper does not argue that Africa’s performance is good in all areas, only that its relative performance looks worse because of the particular way in which the MDG targets are set.

Measuring social and economic progress is not at all as straightforward as the discussion of the MDGs makes it seem. Setting targets in a particular way will make some regions look better and others look worse depending on a number of choices that any target-setting exercise must make. These choices include the following:

Choice of benchmark year
Linear vs. nonlinear relationships with time or per capita income

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William Easterly

Business Bookshelf: Surprised by Opportunity

William Easterly — Wed, 14 Nov 2007 12:00:00 -0500

Review of Strategic Intuition: The Creative Spark in Human Achievement, by William Duggan.

Set big goals. Do whatever it takes to reach them. These muscular sentences form the core of commencement addresses, business-advice books, political movements and even the United Nations approach to global poverty. In "Strategic Intuition," a concise and entertaining treatise on human achievement, William Duggan says that such pronouncements are not only banal but wrong.

Mr. Duggan, who teaches strategy at Columbia Business School, argues that the commonplace formula has it backward. Instead of setting goals first, he says, it is better to watch for opportunities with large payoffs at low costs and only then set your goals. That is what innovators throughout history have done, as Mr. Duggan shows in a deliriously fast-paced tour of history.

Napoleon is Mr. Duggan's canonical example -- his strategic genius was not to storm a pre-fixed position on the battlefield (the traditional approach to military strategy at the time) but to attack any old position that came along where his army was at its strongest and the enemy's at its weakest. Similarly, in the battle for civil rights, Martin Luther King Jr. seized on the Montgomery bus boycott in 1955 to shift the NAACP's strategy away from filing lawsuits and toward organizing nonviolent civil disobedience.

What appears to be innovative and new, of course, is often just a creative combination of familiar elements. Bill Gates's early success came from minicomputers, standardized software and fast microchips, but each was the invention of someone else and, at the time, better deployed by other people. But Mr. Gates, who originally had started a company called Traf-O-Data to sell computer hardware, was the first to see that a software cookie-cutter could thrive in a world where computers were getting ever smaller and ever faster.

One of the insights of "Strategic Intuition" is that business makes progress by following the opportunistic innovation model, while governments and international-aid agencies aim repetitively at rigid social goals. Such rigidity happens partly for a reason that Mr. Duggan is too polite to mention -- bureaucrats, by nature, rarely give off a creative spark. Mr. Duggan prefers to emphasize a structural cause: The public demands solutions to problems of great social importance; thus bureaucrats get stuck with fixed objectives. Yet Mr. Duggan also shows that social progress often happens by emulating the opportunism of business. Among the most powerful of his examples is Muhammad Yunus's invention of microcredit.

Mr. Yunus wanted to do something about rural poverty in Bangladesh, and his training steered him in the direction of something like the well-drilling and crop-enhancing strategies of the so-called Green Revolution. In the 1970s, he undertook a modest agricultural project along these lines and, achieving some success, won the Bangladesh President's Award. If he had kept to a fixed agriculture goal, though, we never would have heard of him again.

Instead, as he wrote in his memoir, he noticed "a problem I had not focused on before." The Green Revolution was happening, but it was bypassing landless women. They were making handicrafts for a pittance because, to get money for their raw materials, they had to go to the village moneylender, who charged as much as 10% interest a day. Mr. Yunus found a way to make small loans to groups of women at lower interest rates. By doing so, he achieved high repayment rates and higher profits for the landless women, and he founded a global microfinance industry that has benefited millions of people.

Despite such success stories, official aid agencies persist in the bull-headed approach. In a caricature of everything Mr. Duggan says not to do, the U.N. and the World Bank have been pushing a campaign called the Millennium Development Goals. It sets quantitative targets for every conceivable problem of the poor. It then tries to raise whatever it takes in aid money to reach them. This approach has succeeded as a fund-raising strategy but not as a problem-solving one -- it is already clear that most of the goals, if not all, will be missed for Africa, where the problems of the poor are most dire.

The lure of fixed goals is hard to resist even for people who know better. As Mr. Duggan notes, Bill Gates has failed to transfer his Microsoft creative spark to the realm of global poverty. The Gates Foundation is following the fixed-goal approach -- throw a lot of money at the pre-determined goal of an AIDS vaccine, for example. Mr. Gates even gave a Harvard commencement speech on global poverty this year in which he said -- you guessed it -- that you need first to set your goals and then to do whatever it takes to reach them.

If there are still businessmen who feel compelled to follow a fixed- goal plan -- missing out on the profits of opportunistic flexibility -- then at least there is the free market to punish them. Market feedback is surely one big reason that we have so many innovative entrepreneurs. Where the old approach does most of the damage is in social policy, where the feedback is either fuzzy (as in domestic policy) or absent (foreign aid). Social policy could use a lot fewer commencement speakers and a lot more creative sparkers.

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William Easterly

Publication: WallStreetJournal.com

Don't Bank on the Asian Development Bank

William Easterly — Tue, 02 Oct 2007 12:00:00 -0400

Pity the Asian Development Bank. It is trying to come up with a reason to exist for an Asian continent that already is achieving development and doesn't need a Development Bank. Given all the economic success stories in today's Asia, you'd think the ADB could pat itself on the back for a job well done and then pack up and go home. But not so fast, says the ADB, which is desperately trying to find new things to do with its 2,000 employees and $6 billion of annual lending.

To that end, the ADB is working on a Long Term Strategic Framework 2020, a project best read as bureaucratic jargon for the ADB's promise to keep producing bureaucratic jargon through the year 2020. For help with the framework, the ADB commissioned an Eminent Persons Group to tell it what to do with itself. The learned committee was chaired by Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development, a body that has long distinguished itself by promoting all the bad ideas that stifle both trade and development. The end result was a report called "Toward a New Asian Development Bank in a New Asia." The eminences have pointed out to the ADB what should be obvious to anyone who reads this newspaper: The ADB's original raison d'etre of providing capital is obsolete in a capital-surplus region with a large excess of saving over investment.

But rather than recommending that the ADB shut down, the eminences instead posit that the ADB should focus on transmitting "sophisticated, up-to-date knowledge . . . on major development issues." That would be a good idea, but it's tarnished by the poor quality of the ADB's current knowledge efforts. To take two recent examples, consider the ADB's recent report "Inequality in Asia," and its Aid-for-Trade project.

The inequality report is a good example of an iron law of aid: Aid agencies need bad news to justify their existence. Frantically trying to find some bad news in the greatest mass escape from poverty in world history, the quarter-century-old Asian boom, the ADB complains that economic growth worsens "absolute inequality." This is true, but meaningless. If I had a tenfold income increase and Bill Gates only a 10% raise, such economic growth would still worsen the "absolute" income gap between Mr. Gates and me because billionaire Gates's raise is larger in absolute size. But I think most of us would take this growth anyway. Even the ADB concedes the poor are growing richer with economic growth. But this obsession with inequality leads to bad policies, since the only way to avert rising absolute inequality is to stop growth. And anyway, if indeed that's the goal, we don't need the ADB to tell us how to accomplish it -- the Burmese junta has done an admirable job of avoiding growth, and the resulting "absolute inequality," without much advice from the ADB at all.

Then there is Aid-for-Trade. The program is intended to give poor countries financial assistance to "prepare" themselves for trade. But there's evidence that aid inflows actually make exporting more rather than less difficult by fueling currency appreciation. And even setting aside this inconvenient fact, the ADB more generally seems to be rather at sea as to how aid would increase trade. It has produced a lavishly illustrated Aid-for-Trade brochure, which says that aid will result in recipient countries' "mainstreaming trade in national development strategies."

But any Asian leader who hasn't already figured out that trade should be mainstream after Asia's world-historical trade explosion is past the point of rescue anyway. The ADB talks a lot about financing the supply of infrastructure like bridges and ports, overlooking that infrastructure must be demanded as well as supplied. Successful trade booms (and the accompanying infrastructure demand) come about through letting free market entrepreneurs run wild to find things foreigners want rather than consulting ADB bureaucrats on designing a "national development strategy."

* * *

All of which goes to show that the ADB's fundamental problem is that it needs advice from successful Asian countries more than they need advice from it. In the face of this, much of the ADB's framework contents itself with rearranging the deck chairs on the Titanic, tinkering with the bank's management structure perhaps in the hope that some function will follow the form.

The strategic framework suggests creating "prioritized sectors," distinguishing between "core operational areas" and "sectors from where ADB should plan to move out of operations." Unfortunately, the document fails to mention any sectors in the latter category, even while it has scads of ideas for new "operational areas."

Indeed, the ADB is currently following and will surely continue to follow another iron law of aid: Not only do old aid agencies never die, neither does any single old department of an old aid agency. The ADB's focus has if anything gotten less "prioritized," not more, over the quarter century that Asia has been booming. The foreign aid part of ADB, for example, is currently operating in 14 different sectors, each of which averages about 7% of the budget. A summary measure of this kind of splitting up of the budget into many small pieces at the ADB shows it getting steadily worse over the past quarter century.

The ADB should use any creativity it has to think about how it can specialize in something Asia wants instead of finding the imaginary bad news. Given the emergence of Asia as a development success story that doesn't need development banking, the Asian Development Bank must change or die.

Authors

William Easterly

Publication: The Wall Street Journal Online

Are Aid Agencies Improving?

William Easterly — Mon, 01 Oct 2007 12:00:00 -0400

Introduction

For long-time observers of foreign aid, "make poverty history" in Africa and other poor countries has some disquieting signs. The United Nations, the World Bank, the IMF, and the national aid agencies have signed on to an ambitious project called the "Millennium Development Goals," in which poverty rates, infant mortality, and other key indicators of low development would be dramatically reduced by the year 2015. To achieve this, aid agencies have embraced and advocated a program of large aid increases. There is a long debate about how effective is foreign aid at creating economic development and eliminating poverty, going back to Rostow (1960), Chenery and Strout (1966), Bauer (1972), Cassen (1987), World Bank (1998), the UN Millennium Commission (2005), Sachs (2005), and Easterly (2006). Yet despite sharply contrasting views on the effectiveness of aid, there is a surprising degree of unanimity that the aid system is today deeply flawed and could be much improved. For example, UK Prime Minister Tony Blair's Commission for Africa (2005), which called for large increases in aid to Africa, had this to say:

the system for allocating aid to African countries remains haphazard, uncoordinated and unfocused. Some donors continue to commit errors that, at best, reduce the effectiveness of aid. At worst, they undermine the long-term development prospects of those they are supposed to be helping. Rich countries pursue their own fixations and fads... They tie aid so that it can only be used to buy the donor's own products or services—effectively reducing the value of aid by as much as 30 per cent. ...They continue to attach unnecessarily detailed conditions to aid packages. They insist on demanding, cumbersome, time-consuming accounting and monitoring systems—and refuse to link with the recipient's systems. They are insufficiently flexible when it comes to reallocating aid to new priorities in the face of a national emergency. (p. 58)

Similarly, the UN Millennium Project (2005a) led by Jeffrey Sachs, one of the most emphatic proponents of increased aid, has a chapter in its main report entitled "Fixing the aid system," which begins:

Many national strategies will require significant international support. But the international system is ill equipped to provide it because of a shortage of supportive rules, effective institutional arrangements, and above all resolve to translate commitments to action. (p. 193)

The companion Overview report (UN Millennium Project 2005b, pp. 38-39) complains that "Development finance is of very poor quality" (referring to bilateral aid) and that "Multilateral agencies are not coordinating their support."

This dissatisfaction with the aid system is not new. Indeed, one of the important early statements of foreign aid policy, John F. Kennedy's 1961 message to Congress proposing a large increase in foreign aid begins with the statement: "Existing foreign aid programs and concepts are largely unsatisfactory and unsuited for our needs and for the needs of the underdeveloped world as it enters the sixties."

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Was the Wealth of Nations Determined in 1000 B.C.?

Diego Comin, Erick Gong and William Easterly — Sat, 01 Sep 2007 00:00:00 -0400

ABSTRACT

We assemble a dataset on technology adoption in 1000 B.C., 0 A.D., and 1500 A.D. for the predecessors of today's nation states. We find that this very old history of technology adoption is surprisingly significant for today's national development outcomes. Although our strongest results are for 1500 A.D., we find that even technology as old as 1000 B.C. is associated with today's outcomes in some plausible specifications.

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Diego Comin
Erick Gong
William Easterly

What Bono Doesn't Say About Africa

William Easterly — Fri, 06 Jul 2007 00:00:00 -0400

Just when it seemed that Western images of Africa could not get any weirder, the July 2007 special Africa issue of Vanity Fair was published, complete with a feature article on "Madonna's Malawi." At the same time, the memoirs of an African child soldier are on sale at your local Starbucks, and celebrity activist Bob Geldof is touring Africa yet again, followed by TV cameras, to document that "War, Famine, Plague & Death are the Four Horsemen of the Apocalypse and these days they're riding hard through the back roads of Africa."

It's a dark and scary picture of a helpless, backward continent that's being offered up to TV watchers and coffee drinkers. But in fact, the real Africa is quite a bit different. And the problem with all this Western stereotyping is that it manages to snatch defeat from the jaws of some current victories, fueling support for patronizing Western policies designed to rescue the allegedly helpless African people while often discouraging those policies that might actually help.

Let's begin with those rampaging Four Horsemen. Do they really explain Africa today? What percentage of the African population would you say dies in war every year? What share of male children, age 10 to 17, are child soldiers? How many Africans are afflicted by famine or died of AIDS last year or are living as refugees?

In each case, the answer is one-half of 1% of the population or less. In some cases it's much less; for example, annual war deaths have averaged 1 out of every 10,800 Africans for the last four decades. That doesn't lessen the tragedy, of course, of those who are such victims, and maybe there are things the West can do to help them. But the typical African is a long way from being a starving, AIDS-stricken refugee at the mercy of child soldiers. The reality is that many more Africans need latrines than need Western peacekeepers — but that doesn't play so well on TV.

Further distortions of Africa emanate from former British Prime Minister Tony Blair's star-studded Africa Progress Panel (which includes the ubiquitous Geldof). The panel laments in its 2007 news release that Africa remains "far short" of its goal of making "substantial inroads into poverty reduction." But this doesn't quite square with the sub-Saharan Africa that in 2006 registered its third straight year of good GDP growth — about 6%, well above historic averages for either today's rich countries or all developing countries. Growth of living standards in the last five years is the highest in Africa's history.

The real Africa also has seen cellphone and Internet use double every year for the last seven years. Foreign private capital inflows into Africa hit $38 billion in 2006 — more than foreign aid. Africans are saving a higher percentage of their incomes than Americans are (so much for the "poverty trap" of being "too poor to save" endlessly repeated in aid reports). I agree that it's too soon to conclude that Africa is on a stable growth track, but why not celebrate what Africans have already achieved?

Instead, the international development establishment is rigging the game to make Africa — which is, of course, still very poor — look even worse than it really is. It announces, for instance, that Africa is the only region that is failing to meet the Millennium Development Goals (MDGs in aid-speak) set out by the United Nations. Well, it takes extraordinary growth to cut extreme poverty rates in half by 2015 (the first goal) when a near-majority of the population is poor, as is the case in Africa. (Latin America, by contrast, requires only modest growth to halve its extreme poverty rate from 10% to 5%.)

This is how Blair's panel managed to call Africa's recent growth successes a failure. But the reality is that virtually all other countries that have escaped extreme poverty did so through the kind of respectable growth that Africa is enjoying — not the kind of extraordinary growth that would have been required to meet the arbitrary Millennium Development Goals.

Africa will also fail to meet the second goal of universal primary education by 2015. But this goal is also rigged against Africa, because Africa started with an unusually low percentage of children enrolled in elementary school. As economist Michael Clemens points out, most African countries have actually expanded enrollments far more rapidly over the last five decades than Western countries did during their development, but Africans still won't reach the arbitrary aid target of universal enrollment by 2015. For example, the World Bank condemned Burkina Faso in 2003 as "seriously off track" to meet the second MDG, yet the country has expanded elementary education at more than twice the rate of Western historical experience, and it is even far above the faster educational expansions of all other developing countries in recent decades.

Why do aid organizations and their celebrity backers want to make African successes look like failures? One can only speculate, but it certainly helps aid agencies get more publicity and more money if problems seem greater than they are. As for the stars — well, could Africa be saving celebrity careers more than celebrities are saving Africa?

In truth, Africans are and will be escaping poverty the same way everybody else did: through the efforts of resourceful entrepreneurs, democratic reformers and ordinary citizens at home, not through PR extravaganzas of ill-informed outsiders.

The real Africa needs increased trade from the West more than it needs more aid handouts. A respected Ugandan journalist, Andrew Mwenda, made this point at a recent African conference despite the fact that the world's most famous celebrity activist — Bono — was attempting to shout him down. Mwenda was suffering from too much reality for Bono's taste: "What man or nation has ever become rich by holding out a begging bowl?" asked Mwenda.

Perhaps Bono was grouchy because his celebrity-laden "Red" campaign to promote Western brands to finance begging bowls for Africa has spent $100 million on marketing and generated sales of only $18 million, according to a recent report. But the fact remains that the West shows a lot more interest in begging bowls than in, say, letting African cotton growers compete fairly in Western markets (see the recent collapse of world trade talks).

Today, as I sip my Rwandan gourmet coffee and wear my Nigerian shirt here in New York, and as European men eat fresh Ghanaian pineapple for breakfast and bring Kenyan flowers home to their wives, I wonder what it will take for Western consumers to learn even more about the products of self-sufficient, hardworking, dignified Africans. Perhaps they should spend less time consuming Africa disaster stereotypes from television and Vanity Fair.

Authors

William Easterly

Publication: LATimes.com

Brookings: Experts - William Easterly

What Works in Development? - Thinking Big and Thinking Small

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The Civil War in Development Economics

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What Works in Development? : Thinking Big and Thinking Small

ABOUT THE EDITORS

Jessica Cohen

William Easterly

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The Poor Man's Burden

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Foreign Aid Goes Military!

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Can the West Save Africa?

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Development Doesn't Require Big Government

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Best and Worst Practices in Foreign Aid

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6.7 Billion Secrets of Development

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What Works in Development? Thinking Big and Thinking Small

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Trust the Development Experts – All 7 Billion

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Is the Brain Drain Good for Africa?

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Are the Millennium Development Goals Unfair to Africa?

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Superpower Interventions and Their Consequences for Democracy

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How the Millennium Development Goals Are Unfair to Africa

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Business Bookshelf: Surprised by Opportunity

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Don't Bank on the Asian Development Bank

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Are Aid Agencies Improving?

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Was the Wealth of Nations Determined in 1000 B.C.?

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What Bono Doesn't Say About Africa

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