Dead aid: Why aid is not working
and how there is a better way for Africa
Johan van der Walt
Published online: 8 July 2009
Springer Science + Business Media, LLC 2009
Dambisa Moyo’s new book, Dead Aid: Why Aid Is Not Working and How There Is a
Better Way for Africa, has received a great deal of attention in the last few months.
Her first two points, international aid has not only been ineffective but it has also
added to the dysfunctionality of many countries, adds to a long literature in the
subject matter. However, her third point, that a world without aid would produce
better economic growth, makes a new contribution. While I strongly agree with her
first two arguments, her third warrants further consideration. This concern
notwithstanding, Moyo’s book is a must-read for any person interested in the
question of why some countries are rich while others remain stagnant or poor.
Moyo correctly states that “development finance”—the money used to finance
development projects—necessitates a new way of thinking. Currently, many open-
ended aid commitments exist where donor countries and multilateral agencies keep
financing projects without clear prospects for results or bringing financing to an end.
This creates a world in which elected officials are incentivized to walk to the beat of
international donor agencies rather than their own constituents. Many aid projects have
also fueled coordination and corruption problems that led to the dysfunctionality of too
many regimes. This is why the choosing of “development finance” is as important as
the selection of policies that governments adopt.
Drawing on her background at the World Bank and Goldman Sachs, Moyo
proposes a range of aid-free solutions to finance development projects. From gaining
deeper access to international bond markets and further encouraging Chinese foreign
direct investment to pushing for greater trade openness and supporting greater
financing options for the poor, Moyo considers what such a world without aid might
look like. Against the backdrop of the hypothetical country of Dongo—depicted as
the prototypical modern African nation-state—Moyo illustrates the impact of these
varying development strategies. Africa’s prospects for growth will significantly
advance with consideration of these alternatives.
Rev Austrian Econ (2009) 22:431–432
J. van der Walt (*)
Mercatus Center, George Mason University, Fairfax, VA, USA