Development

  • Aid & Development – PDF
  • Agriculture & Poverty – PDF
  • Fixing Famine: How technology and incentives can help feed Africa – PDF
  • Habits of Highly Effective Countries – Lessons for South Africa – PDF
  • Habits of Highly Effective Countries – Lessons for India – PDF
  • Institutional Quality Index 2008 – PDF
  • Perpetuating Poverty in Sub-Saharan Africa – PDF

Aid & Development – Will it work this time?

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For fifty years, proponents of ‘aid’ have argued that poor countries are poor because they lack the funds to invest in the infrastructure that would enable economic activity to take place, which in turn means that they are unable to attract investment.

Originally used to justify mega-projects, such as roads and dams, these arguments continue today in modified form, ostensibly justifying investments in schools and hospitals. Donors have justified aid with various theories and political motivations, but its core justification, the ‘gap theory’, is fundamentally flawed. This theory assumes that poor countries are trapped in a vicious cycle of poverty because they are unable to save and hence have insufficient capital to invest in growth-promoting, productivity-enhancing activities. But there simply is no evidence that this savings/investment ‘gap’ exists in practice.

As a result, aid has failed to ‘fill the gap’. Instead, it has, over the past fifty years, largely been counterproductive: it has crowded out private sector investments, undermined democracy, and enabled despots to continue with oppressive policies, perpetuating poverty.

Fixing Famine: How technology and incentives can help feed Africa

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The food crisis in mid-2008, which caused riots and protests around the globe, was felt especially hard in Africa. Though food prices have now declined, Africa’s struggles with hunger are far from over. Africa’s ability to feed itself has been in decline for the past four decades. To combat hunger and to encourage economic development, this trend needs to be reversed.

In the short run, simple technology can make a difference in the lives of Africa’s millions of rural farmers by increasing the productivity of their land and thereby increasing incomes. This study, based on fieldwork conducted in Malawi and Kenya, profiles four simple technologies that have major benefits for smallholder farmers. Hybrid and genetically modified seeds, greenhouses, irrigation, and plug seedlings all increase farm outputs and allow farmers to harvest multiple crops a year.

Though these technologies have the potential to be very successful, there are several barriers that prevent their greater use: lack of credit, poor infrastructure, high transaction costs, and educational and cultural barriers. This Policy Comment proposes solutions to these problems.

The Ghost of 0.7% – Origins and Relevance of the International Aid Target

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This paper shatters the current cross-party consensus on international development policy and aid targets, and implies a radical rethink for whichever government is elected.

Its authors discuss the methodology that was originally employed to derive the 0.7% target—based on the “financing gap” theory. They argue that, forty years on, it has become a meaningless political mantra: the original theoretical basis for the target is no longer credible. Moreover, even if the theory were accepted, applying it today would result in governments in rich countries needing to commit only a tiny fraction of the original target thanks to significant increases in private capital flows to developing countries.

The more fundamental argument in this paper suggests that our current obsession with targets and meeting existing aid commitments is an inadequate and backward-looking approach to international development.

To be more effective, UK development policy must consider shifting its focus away from an input-oriented 0.7% aid target, towards a more evidence-based approach.

Perpetuating Poverty in Sub-Saharan Africa –
How African Political Elites Undermine Entrepreneurship and Economic Development

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Economic growth in Africa, as in the rest of the world, depends on a vibrant private sector. Entrepreneurs in Africa, however, face daunting constraints. They are prevented from creating wealth by predatory political elites that control the state. African political elites use marketing boards and taxation to divert agricultural savings to finance their own consumption and to strengthen the repressive apparatus of the state. Peasants, who constitute the core of the private sector in sub-Saharan Africa, are the biggest losers.

In order for Africa to prosper, peasants need to become the real owners of their primary asset– land – over which they currently have no property rights. Peasants must also be given direct access to world markets. They must be able to freely auction their cash crops, including coffee, tea, cotton, sugar, cocoa, and rubber, rather than being forced to sell them to state-controlled marketing boards at discounted prices.

In that respect, South Africa is unique in the region. The country does not have a large disenfranchised peasantry. Most of South Africa’s private sector belongs to South Africans, who also have a say in the political process. The future will show whether those factors will constrain the power of the South African political elite in a manner that is sufficient to safeguard South Africa’s growth potential.