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Who’s responsible for corruption in Africa?

9781610394390_p0_v3_s260x420A review of The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa’s Wealth, by Tom Burgis

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Misconceptions abound in the public perception of corruption in Africa. Tom Burgis’ incisive new analysis of corruption on the continent, The Looting Machine, dispels these dangerous myths.

For starters, corruption is mistakenly believed to reign supreme in every country on the African continent. (There are 48 nations in Sub-Saharan Africa, with a combined population of more than 800 million.) Of course, it’s true that some African countries rank very low on Transparency International’s “Corruption Perceptions Index” (CPI) — after all, Somalia merits the very lowest score, with Sudan and South Sudan not far above it — but only Eritrea and Guinea-Bissau rank at all close to them. In between them are many other countries: Middle Eastern, Central Asian, Caribbean, South Asian. And three Sub-Saharan African nations rank in the top third of the 175 countries in the CPI: Lesotho, Namibia, and Rwanda, with Ghana close behind. Ghana scores better than Greece, Italy, and several other European nations.

Second, corruption in Africa is viewed as intractable. It’s widely believed that nothing can be done about it. Nonsense! One of the largest and most potent sources of the cash that fuels corruption is foreign aid. Institutions like the World Bank, USAID, and other national and international agencies direct most, if not all, their support to governments. This, despite the obvious evidence on the ground that a huge proportion of this aid goes straight into the pockets of the ruling elites. If foreign aid were doled out more selectively to community-based organizations, local agencies, and NGOs with grassroots operations, the picture might be very different. As things stand, only a trickle of foreign aid gets to the people who need it most: the poor.

Lastly, and most significantly, too many observers characterize African corruption as a uniquely African phenomenon that grows out of ethnic rivalries and the failure of European colonists to establish stable native governments. Those factors, while present, are only part of the story. Equally, if not more, consequential is the role of foreign investment — principally from China, the US, and Western Europe — in exploiting the continent’s abundant resources, often paying through the nose for the privilege. Corruption is a two-way street: briber and bribee need each other. And those Western investors include some of the world’s biggest US- and European-based multinational corporations — most prominently, Big Oil and the major mining companies. Chinese companies are even worse because they’re not constrained by legal restrictions at home. Prominent foreign aid cheerleaders like Jeffrey Sachs of Columbia University do the African people no favors by advocating huge increases in official aid, rationalizing that some of it will actually do good. Just ask the first ten Africans you meet on the street in Lagos or Nairobi or Luanda. Unless you happen to run into a member of the privileged elite, you’ll get an earful about Western-enabled corruption.

The Looting Machine spotlights this two-way street, with an emphasis on commerce. The role of foreign aid receives little attention. The principal source of corruption in Africa, Burgis contends again and again, is its wealth of natural resources: oil, gas, gold, diamonds, copper, iron, and many other materials essential to the rich nations’ consumer economies. Citing an analysis by McKinsey, he reports that “69 percent of people in extreme poverty live in countries where oil, gas, and minerals play a dominant role in the economy and that average incomes in those countries are overwhelmingly below the global average.” This is one of the most tragic consequences of what economists refer to as the “resource curse.” Burgis asserts that “An economy based on a central pot of resource revenue is a recipe for ‘big man’ politics.”

It’s no accident that the resource curse finds its fullest expression in Africa: the continent accounts for 13 percent of the world’s population and just 2 percent of its cumulative gross domestic product, but it is the repository of 15 percent of the planet’s crude oil reserves, 40 percent of its gold, and 80 percent of its platinum — and that is probably an underestimate.”

The scope of the corruption this cornucopia of resources makes possible is difficult to comprehend. For example, “When the International Monetary Fund examined Angola’s national accounts in 2011, it found that between 2007 and 2010 $32 billion had gone missing.” That’s billion with a “B.” And this, in a country of just 21 million people — a population roughly equivalent to that of Sao Paulo, Seoul, or Mumbai.

If you want to gain perspective on poverty, war, and corruption in Africa, read this book.

The emphasis in The Looting Machine is on those countries Burgis knows well: Angola, Nigeria, Congo, with less intensive reporting from several other nations.

Tom Burgis has worked for the Financial Times in Africa since 2006, covering business, politics, corruption, and conflict. On his LinkedIn page, he describes his reporting as encompassing “Oil, mining, terrorism, the arms trade, corporate misconduct, intelligence, money-laundering, the underbelly of the global economy, forgotten warzones, tales of the human soul.” He is currently the Investigations Correspondent for the Financial Times, no longer limited to Africa.

 

A surprising analysis: why economic development happens (or doesn’t)

economic development: The Tyranny of Experts by William EasterlyThe Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly

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This book is full of surprises.

In The Tyranny of Experts, the author of the seminal book The White Man’s Burden drills down into the history of economic development around the world in search of its causes. What he finds has little to do with any of the factors bandied about among contemporary development professionals.

“The conventional approach to economic development, to making poor countries rich,” William Easterly writes, “is based on a technocratic illusion: the belief that poverty is a purely technical problem amenable to such technical solutions as fertilizers, antibiotics, or nutritional supplements . . . The technocratic approach ignores what this book will establish as the real cause of poverty — the unchecked power of the state against poor people without rights.”

Instead, Easterly maintains, the fundamental pre-condition for successful development is democracy paired with deep understanding of local history. He calls the establishment of the World Bank “the moment of original sin . . . in which the Bank disavowed the ideals of freedom . . .”

Academia has been good to William Easterly. Presumably, when he was forced out of the World Bank because of his outspoken criticism of the Bank’s support for corrupt regimes and pro-Western favoritism, he was looking for a platform on which he could continue his campaign to shift the consensus among development professionals from top-down “solutions” to support for bottom-up, grassroots initiatives. He’s gotten that platform, but his position on the faculty of New York University has also moved him to dig more deeply into the intellectual roots of his thinking. The Tyranny of Experts is one result.

This book is intellectually very ambitious. Easterly finds the common denominator for successful development not in policies, procedures, or leaders but in an environment in which the rights of poor people are respected. On the most fundamental level, he insists, the biggest success stories in development are to be found in what we’ve grown used to calling “the West.” In these rich countries, democratic government accountable to voters left them essentially free to exercise their genius for innovation. Variations on the capitalist system provided the incentives for individual initiative and hard work, the result of which has been a meteoric increase in per capita income during the past two centuries in the West, compared with a slow increase for the Rest. Yet development professionals ignore the stunning, long-range success of the West and turn instead to models based on short-term (and usually temporary) growth spurts.

In recent decades, it has been fashionable to point to China as proof that development is best facilitated by “benevolent tyrants.” Easterly finds this argument unconvincing for at least three reasons:

(1) The major boost to Chinese productivity, and hence the biggest factor in increasing the country’s per capita income, was the grassroots movement among farmers freed from collective farms to till their own land. This development began taking hold in 1978, at the same time as Deng Xiao Peng’s accession to power, but had as much to do with the Chinese breakthrough as Deng’s actions as Secretary of the Communist Party. In fact, it was only in 1982 that the Party made official the dispersion of landholding that was already widespread throughout the country.

(2) Easterly proves that the only factor that correlates closely with sustained, high-octane development is regionalism. China, after all, lies in East Asia, home of what Easterly calls the “Gang of Four” breakthrough economies (otherwise known as the “Asian Tigers”): Taiwan, South Korea, Hong Kong, and Singapore. Statistical analysis proves that’s no accident.

(3) The anonymous spread of the potato “increased the calories, vitamins, and nutrients produced by a given amount of land, thus sustaining a larger population” and offers “more evidence for attributing the rise of China as an economic superpower” than any conscious policy of the Party, much less of Premier Deng. I found this claim so puzzling that I checked out Easterly’s facts: lo and behold, the American Journal of Potato Research reported more than a decade ago that “China is now the world’s largest potato-producing country, and nearly a third of the world’s potatoes are harvested in China and India.” (Who knew? I can’t recall ever seeing potatoes in a Chinese meal!)

One of the most valuable aspects of this book is Easterly’s habit of finding revealing truths in areas others never consider. The importance of the potato to China is just one example. Another is his conclusion that “one of the regional factors that held back African development was that Africa had too many nations.” (It’s obvious — once you read the book.)

The Tyranny of Experts is a brilliant inquiry into economic history, with excursions into political science, sociology, and other disciplines. By making a solid case for individual initiative as the driving force in development rather than the policies of leaders, William Easterly has made a major contribution to the field. However, there in one major area in which I take issue with the author.

Economist that he is, Professor Easterly uses per capita income as the exclusive measure of development. This choice is problematic both because it’s a poor reflection of the well-being of poor people (who are, after all, the principal concern of the field) and because it presumes that economic growth — the output of more and more stuff — is necessarily good. If I earn $700 per year (about $2 per day) and Bill Gates earns $2 billion, it’s small comfort to me that our “per capital income” is $1,000,000,350. And if Mr. Gates consumes enough water and electricity to maintain his 66,000-square foot house that could otherwise meet the needs of . . . well, lots of people, that’s far from good for the planet — or for you or me. (Not so incidentally, Easterly calls out Bill Gates for special criticism for his exaggerated faith in quantifying change.)

Incidentally, I also note that in two references in his book to those who comprise “development professionals” Easterly includes only staff of the World Bank, the United Nations, and the overseas aid agencies of national governments. He excludes NGOs, many of which employ large numbers of professionals working in development programs throughout the Global South. I find this peculiar.

There is so much more that’s worthy of comment in this outstanding book that I can’t possibly do justice to it in this short review. All I can say is, if you’re involved in any way in economic development work, or simply concerned about ending poverty, The Tyranny of Experts is essential reading. Despite its flaws, it’s simply brilliant.

You might also be interested in seeing 14 of the best recent nonfiction books, of which this is one. Also, check out 8 great books about Africa.

December 17, 2013

How the inequality gap came to be

1The Great Escape: Health, Wealth, and the Origins of Inequality, by Angus Deaton

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Has the human race made progress since the days when all our lives were nasty, brutish, and short?

Some might think this question patently silly, since it would appear to answer itself. But Angus Deaton finds in it a point of entry into his inquiry on “health, wealth, and the origins of inequality,” the subtitle of his ambitious new book. He is in no doubt that humanity has progressed, not steadily but by fits and starts — and continues to do so to this day. “Today,” he writes, “children in sub-Saharan Africa are more likely to survive to age 5 than were English children born in 1918 . . . [and] India today has higher life expectancy than Scotland in 1945.”

In The Great Escape, Deaton, a veteran professor of economics and international affairs at Princeton, explores inequality — between classes and between countries — with a detailed statistical analysis of trends in infant mortality, life expectancy, and income levels over the past 250 years. He concludes that the large-scale inequality that plagues policymakers and reformers alike in the present day is the result of the progress humanity has made since The Great Divergence (between “the West and the rest”) since the advent of the Industrial Revolution. “Economic growth,” Deaton asserts, “has been the engine of international income inequality.” 

No argument there: Deaton is far from alone in this belief. Other scholars have written extensively about this topic in recent years. A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark, is just one example.

Late in the 18th Century, the countries of Northern Europe and North America on the one hand and those of Asia, Africa, the Middle East, and Latin America on the other hand were not that far apart as measured by the available indicators of health and income. Deaton cites “one careful study [that] estimates that the average income of all the inhabitants of the world increased between seven and eight times from 1820 to 1992.” However, that average obscures a harsh reality. The ever-quickening rate of change in “the West” since 1760 or so has widened the gap between (and within) countries to an extreme degree. Deaton terms the freedom from destitution and early death that so many of us now enjoy “The Great Escape,” taking his title from the 1963 film of that name about a massive escape of prisoners from a German P.O.W. camp in World War II. 

Only now is the gap closing between the rich nations and China and India (by far the world’s two biggest countries, with nearly 40 percent of the planet’s population and half the world’s poor). Deaton doesn’t consider a bright future for all a certainty, not by any means, in view of global climate change and the ever-present threat of killer pandemics. But, assuming the species continues to thrive, there is sufficient data available now to have some confidence that the gross inequality now existing among nations will not persist forever. After all, five sub-Saharan African countries are now growing their economies faster than China’s.

However, that misleading factoid ignores the outsize role that China has played in “the Great Escape” globally. Deaton notes, as have other observers, that “the number [of] people in the world living on less than a (2005) dollar a day fell from about 1.5 billion in 1981 to 805 million in 2008 . . .  [This] decline in numbers is driven almost entirely by the Chinese growth miracle; if China is excluded, 785 million people lived on less than a dollar a day in 1981 compared with 708 million in 2008.” (This reality is one of the principal reasons why Paul Polak and I insist in The Business Solution to Poverty that traditional methods to end poverty have largely failed. After all, China’s methods were hardly traditional!)

In the course of exploring the historical record of growing inequality on the world stage, Deaton delves deeply into the role of foreign aid (officially, Overseas Development Assistance, or ODA) and finds it comes up short. “You cannot develop other countries from the outside with a shopping list for Home Depot, no matter how much you spend,” he writes. With the exception of outside interventions in public health programs — including such breakthroughs as the eradication of smallpox and the near-success with polio — Deaton finds that foreign aid has done more harm than good. He argues that where the conditions for development are present, outside resources are unnecessary. Where they’re absent, ODA entrenches local elites, distorts the local economy, and discourages local initiative. The author insists that “the record of aid shows no evidence of any overall beneficial effect.”

But that’s only part of the story.

In 2012, ODA totaled about $136 billion. Throw in another $30 billion or so from NGOs, and total outside assistance comes to under $200 billion annually. However, net resource transfers from developing countries to rich countries are well in excess of $500 billion annually. (Transfers reached a peak of $881 billion in 2007, fell with the Great Recession, but are rising again.) Quite apart from the fact that an estimated 70 percent of “foreign aid” is actually spent on products and services from donor nations, ODA merely puts a dent in the huge disadvantage that poor countries suffer as a result of lopsided trade policies and prevailing political and commercial imbalances. In any case, just one factor in those resource flows — remittances from overseas residents of poor countries to their families back home — are twice as large as ODA.

The Great Escape is a worthy effort from a senior scholar whose wide-ranging studies have led him to big-picture conclusions. Policymakers and practitioners should be listening carefully.

 

 

Narrowing global inequities: a reading list

Narrowing global inequitiesAs I’ve dug more deeply into the subject of global poverty in the course of writing The Business Solution to Poverty with Paul Polak, it has become increasingly clear to me that truly understanding how today’s glaring inequities have come about requires extensive knowledge in a wide array of topics, from Third World history to social psychology, development economics to the history of business and international trade.

Well, I confess I’m no expert in any of those fields. I’ve read widely in some, superficially in others, and I’m learning a lot.

My reading has emphasized economic history, the economics of poverty, colonialism, Third World development, social enterprise, and the ongoing debate about the impact of “foreign aid” (more properly, overseas development assistance). Along the way, I’ve reviewed in my blog many of the books I’ve read.

In previous posts, I’ve offered up reading lists on some of these subjects individually. Here, I’m sharing a compiled list. I’ve read all these books — some before I began my blog, so that I haven’t reviewed them. Where I’ve reviewed a book, you’ll find boldfacing and underlining that signifies a link to my review. The books are listed alphabetically by the author’s last name.

Banerjee, Abhijit, and Esther Duflo, Poor Economics A Radical Rethinking of the Way to Fight Global Poverty. PublicAffairs, 2011. 

Bing, Eric C., and Marc J. Epstein, Pharmacy on a Bicycle: Innovative Solutions for Global Health and Poverty. Berrett-Koehler Publishers, 2013. 

Bornstein, David, How to Change the World: Social Entrepreneurs and the Power of New Ideas. Oxford University Press, 2007.

——, The Price of a Dream: The Story of the Grameen Bank. Oxford University Press, 2005.

——, and Susan Davis, Social Entrepreneurship: What Everyone Needs to Know. Oxford University Press, 2010.

Clark, Gregory, A Farewell to Alms: A Brief Economic History of the World. Princeton University Press, 2007.

Cohen, Ben, and Mal Warwick, Values-Driven Business: How to Change the World, Make Money, and Have Fun. Berrett-Koehler Publishers, 2006.

Collier, Paul, The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It. Oxford University Press, 2007.

Collins, Daryl, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven, Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton University Press, 2009.

Crutchfield, Leslie R., and Heather McLeod Grant, Forces for Good: The Six Practices of High-Impact Nonprofits, 2nd Edition. Jossey-Bass Publishers, 2012.

Diamond, Jared, Collapse: How Societies Choose to Fail or Succeed. Viking Press, 2005.

Easterly, William, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. Penguin Press, 2006.

Elkington, John, and Pamela Hartigan, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World.Harvard Business Review Press, 2008.

Govindarajan, Vijay, and Chris Trimble, Reverse Innovation: Create Far From Home, Win Everywhere. Harvard Business Review Press, 2012.

Guha, Ramachandra, India After Gandhi: The History of the World’s Largest Democracy. HarperCollins Publishers, 2007.

Hochschild, Adam, King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa. Houghton Mifflin Company, 1998.

Kamkwamba, William, and Bryan Mealer, The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope. HarperCollins Publishers, 2009.

Kidder, Tracy, Mountains Beyond Mountains: The Quest of Dr. Paul Farmer, a Man Who Would Cure the World. Random House,2003.

Kristof, Nicholas D., and Sheryl WuDunn, Half the Sky: Turning Oppression Into Opportunity for Women Worldwide. Knopf, 2009.

Light, Paul Charles, The Search for Social Entrepreneurship. Brookings Institution Press2008.

Lynch, Kevin, and Julius Walls, Jr., Mission, Inc.: The Practitioner’s Guide to Social Enterprise. Berrett-Koehler Publishers, 2008.

Mehta, Pavithra, and Suchitra Shenoy, Infinite Vision: How Aravind Became the World’s Greatest Business Case for Compassion. Berrett-Koehler Publishers, 2011.  

Moyo, Dambisa, Dead Aid: Why Aid is Not Working and How There Is a Better Way for Africa. Farrar, Straus and Giroux, 2009.

Newitz, Annalee, Scatter, Adapt, and Remember: How Humans Will Survive a Mass Extinction. Doubleday, 2013. 

Polak, Paul, Out of Poverty: What Works When Traditional Approaches Fail. Berrett-Koehler Publishers, 2006.

Prahalad, C. K., The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Pearson Prentice Hall, 2004.

Rifkin, Jeremy, The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World. Palgrave Macmillan, 2011. 

Sachs, Jeffrey D., The End of Poverty: Economic Possibilities for Our Time. Penguin Press, 2005.

Schwartz, BeverlyRippling: How Social Entrepreneurs Spread Innovation Throughout the World. Jossey-Bass Publishers,2012.

Sinclair, Hugh, Confessions of a Microfinance Heretic: How Microlending Lost Its Way and Betrayed the Poor. Berrett-Koehler Publishers, 2012. 

Sullivan, Nicholas P., You Can Hear Me Now: How Microloans and Cell Phones Are Connecting the World’s Poor to the Global Economy. Jossey-Bass Publishers, 2007.

Wrong, Michaela, It’s Our Turn to Eat: The Story of a Kenyan Whistle-Blower. HarperCollins Publishers, 2006.

18 nonfiction books that helped me understand the world

nonfiction booksDuring the last several years — mostly after I bought my first Kindle — I’ve spent a great deal of time reading, roughly half of it fiction, the other half non. I’ve gotten through hundreds of books and have reviewed the last 200 or so in this blog. It feels like a good time to cast a backwards look and identify those books that remain vivid in my memory — books that helped me understand the way the world works. Though most of the fiction I’ve read has been simply enjoyable, a few have touched me. None, though, have really nestled deep into memory and changed the way I view life and the world. I learn mostly from nonfiction. Whatever that says about my character — so be it.

Here, then, are the 20 nonfiction books that have impressed me the most in recent years. They’re arranged in alphabetical order by the authors’ last names. Those I’ve reviewed are boldfaced and linked.

Alexander, Michelle, The New Jim Crow. A shocking survey of the consequences of America’s so-called War on Drugs and the racism in our justice system

Banerjee, Abhijit, and Esther Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. A rigorous and balanced view of both top-down and bottoms-up development policies in the light of field research

Clark, Gregory, A Farewell to Alms: A Brief Economic History of the World. History as I like it: painted in broad swaths across the millennia, rejecting the myth that the “West” was destined to rule the world

Diamond, Jared, Guns, Germs, and Steel: The Fates of Human Societies. A brilliantly original view of world history from a geographer’s perspective, ascribing variable levels of development primarily to environmental and geographical factors

Easterly, William, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. The case against foreign aid and top-down development, by a former World Bank economist

Elkington, John, and Pamela Hartigan, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World. The liveliest and most insightful of several books on social entrepreneurs

Gladwell, Malcolm, The Tipping Point: How Little Things Can Make a Big Difference. The seminal book on understanding “six degrees of separation” and the way networks work

Harden, Blaine, Escape from Camp 14: One Man’s Remarkable Odyssey from North Korea to Freedom in the West. A riveting tale of the North Korean gulag, spotlighting the reality of repression in the Kim family’s private kingdom

Hochschild, Adam, King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa. One of the most troubling books I’ve ever read about the legacy of colonialism: the harrowing story of how the Belgian King destroyed the Congo and murdered millions of its people

Johnson, Chalmers, Blowback: The Costs and Consequences of American Empire. A scholar and former U.S. official demonstrates how the U.S. dominates the world through hundreds of military bases, undermining our nation’s reputation and robbing our society of the means to address pressing social problems

Larson, Erik, In the Garden of Beasts: Love, Terror, and an American Family in Hitler’s Berlin. An eye-opening account of U.S. official anti-Semitism in FDR’s Administration that shackled our Ambassador in Berlin who witnessed the outrageous acts unfolding in Nazi Germany

Mann, Charles C., 1491: New Revelations of the Americas Before Columbus. A revisionist view of Native American society in both North and South America, offering proof of huge populations and sophisticated civilizations in the present-day U.S. and in the Amazon Basin

Miller, Brian, and Mike Lapham, The Self-Made Myth: And the Truth about How Government Helps Individuals and Businesses Succeed. A clear-eyed look beyond the bounds of Right-Wing ideology at the immeasurable benefits and services every “self-made man” has received from U.S. society

Mukherjee, Siddhartha, The Emperor of All Maladies. An oncologist’s brilliant history of cancer and of the medical profession’s slowly developing success in treating it

Polak, Paul, Out of Poverty: What Works When Traditional Approaches Fail. How a former psychiatrist, laboring face-to-face with $1-a-day farmers in some of the world’s poorest countries, helped 17 million families escape from poverty

Priest, Dana, and William M. Arkin, Top Secret America: The Rise of the New American Security State. A Pulitzer-Award-winning Washington Post reporter and her researcher rip the cover from the enormous intelligence establishment built after 9-11

Skloot, Rebecca, The Immortal Life of Henrietta Lacks. A science reporter’s captivating ten-year search to understand the consequences of a medical crime committed in an overtly racist era before the rise of medical ethics

Ward, Vicky, The Devil’s Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers. The most intimate and candid account of how Wall Street played the central role in launching the Great Recession

Wrong, Michela, It’s Our Turn to Eat: The Story of a Kenyan Whistle-Blower. A vivid account by a Financial Times reporter of how corruption holds sway even in one of Africa’s most developed economies 

The top 10 books on the economics of poverty

top 10 booksBack in January, I posted “Third World development: A reading list.” Today, the celebrated rural development specialist and author, Paul Polak, called my attention to a similar list that was published at about the same time in the Stanford Social Innovation Review, an outstanding journal that has run a few of my articles and reviews. Only three titles appear on both lists, so I’m reproducing the SSIR article in its entirety here.

The Top 10 Books on the Economics of Poverty  

A suggested reading list to provide a foundation for understanding development, aid, and poverty

By Amy Lockwood

The growing community of students and professionals who are turning their attention to social endeavors as careers is inspiring. As someone who made the career switch from strategy consulting to international development work, I remember all too well the anxiety of trying to understand the different theories, familiarize myself with the players, and become fluent in the languages of this community.

In addition to listening more than speaking, cultivating curiosity, and abandoning the fear of looking stupid when asking, “What does [fill in the blank] mean?”—in my first years in this new space, I asked for recommendations of books that would provide a foundation for my understanding of development, aid, and poverty. I recently revisited these recommendations as a member of the Opportunity Collaboration, and the following is a suggested reading list to provide a foundation for your adventures.

The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good (2006), by William Easterly

Easterly, a celebrated economist, presents one side in what has become an ongoing debate with fellow star-economist Jeffrey Sachs about the role of international aid in global poverty. Easterly argues that existing aid strategies have not and will not reduce poverty, because they don’t seriously take into account feedback from those who need the aid and because they perpetuate western colonial tendencies.

The End of Poverty: Economic Possibilities for Our Time (2006), by Jeffrey Sachs

Taking an almost entirely diametrical approach than Easterly, Sachs outlines a detailed plan to help the poorest of the poor reach the first rung on the ladder of economic development. By increasing aid significantly to provide the basic infrastructure and human capital for markets to work effectively, Sachs argues such investment is not only economically sound but a moral imperative.

The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (2007), by Paul Collier  

Economist and Africa expert Collier analyzes why a group of 50 nations, home to the poorest one billion people, are failing. Considering issues such as civil war, dependence on extractive industries, and bad governance, he argues that the strongest industrialized countries must enact a plan to help with international policies and standards.

The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (2009), by C.K. Prahalad

Prahalad, a business strategy professor, was among the first to argue that the fastest growing market in the world was made up of the world’s poorest people. He details the purchasing power of this segment, and advocates that big businesses should learn how to understand this population’s needs in order to develop products that address both economic mobility and corporate growth and profit.

Creating a World Without Poverty: Social Business and the Future of Capitalism (2009), by Muhammad Yunus

Yunus, an economist and Nobel Prize Winner, was among the first to describe a social business as one that is modestly profitable but designed primarily to address a social objective. Using this approach, he argues that modern-day capitalism is too narrowly defined, particularly in its emphasis on profit maximization. By including social benefits in the equation, he believes that markets and the poor themselves can alleviate poverty.

Out of Poverty: What Works When Traditional Approaches Fail (2009), by Paul Polak

Polak, a psychiatrist, has applied a behavioral and anthropological approach to alleviating poverty, developed by studying people in their natural surroundings. He argues that there are three mythic solutions to poverty eradication: donations, national economic growth, and big businesses. Instead, he advocates helping the poor earn money through their own efforts of developing low-cost tools that are effective and profitable.

Dead Aid: Why Aid is Not Working and How There Is a Better Way for Africa (2009), by Dambisa Moyo  

Moyo, a Zambia-born economist, asserts that aid is not only ineffective—it’s harmful. Her argument packs a strong punch because she was born and raised in Africa. Moyo believes aid money promotes the corruption of governments and the dependence of citizens, and advocates that an investment approach will do more to help reduce poverty than aid ever could.

Poor Economics A Radical Rethinking of the Way to Fight Global Poverty (2011), by Abhijit Banerjee & Esther Duflo

Using the framework of randomized control trials, which allow for large-scale data collection to evaluate the effectiveness of an intervention, these two development economists assess the impact of a wide range of development programs in alleviating poverty. They have found that most programs have not been designed with a rigorous understanding of the behaviors and needs of the poor or how aid effects them, they advocate that for programs to be successful they must be designed with evidence gathered from direct interaction with those who they are meant to benefit.

Development As Freedom (2000), by Amartya Sen

A Nobel Prize winning economist, Sen examines the essential role that elementary freedoms, social and political, have in improving the prosperity of the society at large. Although his focus on human welfare as a central aspect of economic thought is not universally accepted among economists, this approach inserts elements of ethics into a field from which it is often not emphasized. Although this is a difficult read, the concepts included are important to the dialogue about the causes and remedies to the economics of poverty.

Good to Great and the Social Sectors (2005), by Jim Collins

Meant to accompany the seminal business book Good to Great that examined why companies succeed or fail and found nine key aspects, including: leadership, simplicity, discipline and innovation, this work focuses on applying these lessons to the nonprofit sector. While more focused on management of organizations than macroeconomic issues, this short and easy to read monograph suggests a roadmap of how those interested in addressing issues of poverty should pursue these efforts.

Amy Lockwood is the Deputy Director of the Center for Innovation in Global Health at Stanford’s School of Medicine, where she works on research, education, and innovation programs focused on issues of global health. With a background spanning the business, nonprofit and academic sectors, she has deep experience developing strategies, managing, and evaluating development projects and organizations throughout Africa, Asia, and Latin America.

Third World development: A reading list

Third World developmentTo my mind, the emergence of new nations out of a colonial past was one of the most significant developments of the 20th Century, and their uneven struggle to attain the comforts and possibilities of life to be found in Europe, North America, and Japan continues to loom large in the 21st Century. As a consequence, a fair proportion of my reading bears on these issues.

Much of what is written about development in what is variously called the Third World, the Global South, the under-developed countries, or the developing nations is self-serving and less than useful as a guide to understanding the true issues involved. The underlying reality is that since World War II the countries of the “West” have invested a total of nearly $2.5 trillion in “foreign aid” (as it’s popularly known in the USA) or “overseas development assistance” (as it’s termed elsewhere). You might think that investments of that magnitude would have produced dramatic improvements in the quality of life for the billions of people who live in poverty. However, the truth is appalling: there is precious little to show for this outpouring of aid other than the most obvious advances in education and public health.

Here are some of the books I’ve read in recent years that cast light on this reality. Some of them directly address the issues surrounding foreign aid. Others illuminate the backdrop to those issues. But I don’t pretend this list is comprehensive in any way. It’s simply a starting-point. I’ve listed these books in alphabetical order by the authors’ surnames.

Bornstein, David, How to Change the World: Social Entrepreneurs and the Power of New Ideas. Oxford University Press, 2007. Much of the social change taking place today in the world’s poorest countries is a result of the work of the venturesome folks called “social entrepreneurs” — and Ashoka, the USA-based organization that supports them by the thousands. This box profiles nine of the better-known Ashoka Fellows, demonstrating the role of local leadership in making the world a better place.

——, The Price of a Dream: The Story of the Grameen Bank. Oxford University Press, 2005. Muhammad Yunus gained global fame when he won the Nobel Peace Prize in 2006, but the story of his decades of dogged efforts in Bangladesh — and of the immense organization he built — is much less well know. This book demonstrates how home-grown solutions to development programs are often superior to anything imposed on developing countries by the international community.

Clark, Gregory, A Farewell to Alms: A Brief Economic History of the World. Princeton University Press, 2007. Clark puts the question of economic development in historical perspective, dispelling long-popular myths about the supremacy of the West.

Diamond, Jared, Collapse: How Societies Choose to Fail or Succeed. Viking, 2005. A fascinating exploration of the historical influence of environmental factors in the failure of “developing countries” — and a sobering perspective on the prospects for development breakthroughs in much of today’s overpopulated world.

Easterly, William, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. Penguin Press, 2006. This is the best book that tackles the issue head-on and makes the clearest case for an explanation.

Guha, Ramachandra, India After Gandhi: The History of the World’s Largest Democracy. HarperCollins Publishers, 2007. In global perspective, the greatest challenges to narrowing the inequities among nations lie in sub-Saharan Africa and India. This history of the subcontinent after independence helps to convey the complexity of the issues faced by change agents in the world’s second most populous nation.

Hochschild, Adam, King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa. (Houghton Mifflin Company, Boston and New York, 1998). The most dramatic portrayal of the legacy of colonialism I’ve ever read.

Kamkwamba, William, and Bryan Mealer, The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope. HarperCollins Publishers, 2009. The astonishing story of a brilliant, self-taught young man who demonstrated the vast potential that underdevelopment leaves behind.

Kristof, Nicholas D., and Sheryl WuDunn, Half the Sky: Turning Oppression Into Opportunity for Women Worldwide. Knopf, 2009. It is impossible to tackle the issue of economic and social development without considering the central role of women: it’s become a truism in the field that the education and empowerment of women is the surest first step toward meaningful social change. Nick Kristof, a long-time New York Times columnist, is one of the world’s most incisive observers of the daily reality lived by people in the Third World. Previously, Kristof and WuDunn reported jointly from China for the Times.

Mehta, Pavithra, and Suchitra Shenoy, Infinite Vision: How Aravind Became the World’s Greatest Business Case for Compassion. Berrett-Koehler Publishers, 2011. The Aravind Eye Care System, based in the South Indian state of Tamil Nadu, has had an outsized influence on the treatment of eye disease throughout the world. Pavithra Mehta, a grand-niece of Aravind’s founder, tells the astonishing story of this extraordinary institution, illustrating the potential for indigenous development that shuns outside support.

Prahalad, C. K., The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Pearson Prentice Hall, 2004. In this paean to the multinational corporations of the world, the late C. K. Prahalad, one of the most celebrated management consultants of recent times, presents a host of case studies about the potential of business to foster development while increasing profits. Although the general proposition seems shaky to me, some of the case studies are impressive and thought-provoking.

Sachs, Jeffrey D., The End of Poverty: Economic Possibilities for Our Time. Penguin Press, 2005. Here is the cheerleader’s polyannish case for large-scale development assistance. Useful as a counterpoint to Bill Easterly’s White Man’s Burden, which far better reflects my own experience in developing countries.

Sullivan, Nicholas P., You Can Hear Me Now: How Microloans and Cell Phones Are Connecting the World’s Poor to the Global Economy. Jossey-Bass Publishers, 2007. Grameen Telecom is much less well known that the grassroots bank that spawned it. This intriguing story is a great case study of the long-familiar “leapfrog effect” that allows underdeveloped countries to advance rapidly by skipping over the use of technologies long dominant in the West.

Wrong, Michaela, It’s Our Turn to Eat: The Story of a Kenyan Whistle-Blower. HarperCollins Publishers, 2006. No consideration of Third World development is complete without taking official corruption into account. This story, which focuses on one courageous Kenyan man who tried to expose corruption, brings to light some of the complications it poses.

October 26, 2010

A young man from Malawi points the way to hope for Africa

Hope for Africa: The Boy Who Harnessed the Wind by William KamkwambaThe Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope by William Kamkwamba and Bryan Mealer

@@@@@ (5 out of 5)

A debate has been raging for years within that rarefied global community that earns its keep from the business of what we Americans call “foreign aid.” (Others, less afflicted by an aversion to international engagement, call the field “official development assistance.”)

On one side are the advocates for large-scale bilateral and multilateral aid, insisting that huge grants from the World Bank, the International Monetary Fund, the U.S. Agency for International Development, and their ilk are the only source of real hope for the many desperately poor nations of what is broadly, though incorrectly, called the Global South (Asia, Africa, and Latin America). The advocate-in-chief for this perspective is Professor Jeffrey Sachs of Columbia University, who has argued that massive infusions of aid to the governments of the poorest nations can lift them out of poverty in short order. In 2006, Sachs published his seminal book, The End of Poverty: Economic Possibilities for Our Time, a work that provided the rationale for the Millennium Development Goals.

Arrayed against Sachs and his colleagues are the born-again critics of government-to-government aid, most noticeably William Easterly, a long-time World Bank economist who came in from the cold in recent years to testify to the widespread failure of “foreign aid.” His 2007 book, The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good, set off the debate between the two opposing camps.

The gist of the difference between the two perspectives is simple: One side insists that the problem of poverty is far too big to be addressed through anything other than large-scale action carried out within each poor country on a national scale. The other side contends that top-down, nationwide development programs rarely work and that only solutions crafted at the grassroots and adopted by those who are most affected by them can bring about genuine social change.

Though I’ve read a number of other books taking one side or another in this debate, the work that has cast the most light on the topic is one that paid no attention whatsoever to “foreign aid” or economic development schemes, whether large or small. It’s an extraordinary, first-person tale by a young man from Malawi entitled The Boy Who Harnessed the Wind.

William Kamkwamba, the narrator of this awe-inspiring story, was a seventh-grade dropout who mastered fundamental physics by reading an out-of-date English textbook in a local, three-shelf library near his village and using his knowledge to construct a working windmill out of junkyard parts to generate electricity to irrigate his father’s farm. He was 14 years old.

You can read news reports and even the most perceptive magazine articles about the challenges of development, but you won’t get nearly as close to the essential truth of the challenge as you will from reading The Boy Who Harnessed the Wind. Kamkwamba’s tale is unsparing of himself, his community, and his country. Through his all-seeing eyes, we witness the tragic consequences of the profound official corruption that held sway in Malawi for so many years after it gained its independence from Britain in 1964. We feel the unrelenting hunger he and his family experienced for months on end in the famine of 2001-2002. We see the darkness descend all around us as William is hounded by fearful villagers who can only explain his windmill as magical. But, most of all, we observe the steady evolution of his brilliant young mind as he confronts one setback after another, and prevails over them all.

If there is hope for Africa, as I firmly believe, it lies in the minds and hearts of William Kamkwamba and other young people whose innate genius is unlocked by the spread of education and opportunity for self-expression at the grassroots. There are hundreds, maybe thousands, of William Kamkwambas across Sub-Saharan Africa. And it will be a combination of top-down aid – to build schools, train teachers, and buy textbooks – with the local action of countless NGOs, with both local and international support, that will provide them with the tools and the freedom to solve the problems that have held down their forebears for generations past. I don’t think genuine development – thorough-going social change – will come any other way.