William Easterly has a history of challenging conventional wisdom about foreign aid and economic development. First in The Elusive Quest for Growth and later in The White Man’s Burden, Easterly fatally undermined the simplistic and Eurocentric ideals of most western governments and developmental economists by showing that we have, in fact, already tried their strategies and, in doing so, have done more harm than good.
Easterly’s argument was that we have already tried the high-volume, top-down economic development strategies that came back into fashion around the turn of the millennium. Such plans have never worked outside of Europe, and in many cases have merely encouraged corruption in the already unstable regimes that plague the third world. In his books and lectures, Easterly identified a number of systematic errors in the foreign aid discourse, which he believes have caused the failure of most economic development initiatives.
Amartya Sen and others criticized Easterly for taking a stance they saw as too negative. Some objections were that Easterly had done more to discourage foreign aid itself rather than replace the failed, failing, and doomed foreign aid strategies that dominate the public discourse. Sen argued that Easterly should have offered a plan to replace the old ones.
Easterly fills this perceived vacuum with his new book, Reinventing Foreign Aid. In it, Easterly has collected a variety of essays and papers written by economists, aid workers, and aid officials. Not all of the contributors agree but, unlike the plans put forth by the likes of Jeffery Sachs and Tony Blair, none of the ideas in Reinventing Foreign Aid has already proven worthless.
Some of these new ideas have already been tested, more or less. For example, in “Making Aid Work,” Abhijit Banerjee and Ruimin He highlight a program that reduced HIV infection rates by providing Kenyan girls with school uniforms. The uniforms are required for attendance to some schools in Kenya, and their being given freely amounted to the removal of a major financial barrier to these girls’ entry into school. Banerjee and He also explain other successful projects identified and assessed by the Abdul Latif Jameel Poverty Action Lab at the Massachusetts Institute of Technology.
Other articles bring to the fore astonishingly obvious problems with most major foreign aid programs, problems to which our leading economists and aid officials are strangely blind. For example, in one of the last chapters of the book, Kurt Hoffman points out that the very policies at the heart of economic development in the West, those centered on small business, are simply not part of the conversation about development in the modern third world. Rather than concentrating on entrepreneurship, foreign aid policy-makers devote their attention to top-down governmental plans and policies that affect their respective countries directly.
This is just one of many crippling flaws in the current system of foreign aid, according to Easterly. He and his contributors want to fundamentally change the way we see foreign aid, because the authors believe that problems in our thinking itself play a large role in rendering Western aid policies practically useless. Easterly uses the introduction to identify many of these errors, while his contributors offer solutions.
To demonstrate the utility of their ideas, the contributors use a few institutions that have already proven successful. J-PAL (http://povertyactionlab.org/) embodies the push to actually assess the empirical value of aid programs. GlobalGiving represents an introduction of market qualities, such as competition and accountability, into individual charitable giving. Kiva provides the focus on entrepreneurship that Hoffman argues for. We can only hope that those in power will come to see the value of organizations like these, and emulate their success on a larger scale, if possible.
Reinventing Foreign Aid gives leading innovators in their respective fields an opportunity to share what they have learned about foreign aid and economic development. Each of the book’s 20 articles is important and unique in its contribution. Not all of the articles are easy reading but, for those interested in economic development or simply improving the lot of most of the people in the world, Reinventing Foreign Aid will be a stimulating and valuable read.