'Dead Aid' Is Dead Wrong

The broad American belief that foreign aid is stuffed down tropical rat holes has been recently reinforced by a young Zambian, Oxford-trained economist named Dambisa Moyo. Her book, "Dead Aid," has launched her as a conservative celebrity, feted by Steve Forbes and embraced by the Cato Institute.

And the book is something of a marvel: Seldom have so many sound economic arguments been employed to justify such disastrously wrongheaded conclusions.

Moyo is on firm ground in criticizing decades of direct foreign assistance to African governments. Such aid has often propped up corrupt elites, shielded leaders from the consequences of their own incompetence and delayed reforms necessary for the development of working markets. She is correct in emphasizing the decisive role of trade, direct foreign investment and local capital in the development of poor nations -- sources of opportunity that dwarf aid flows in size and importance.

I'd go further. Through most of the past several decades, the development of Africa has not even been the purpose of foreign aid. Europeans often provided money to elites in former colonies to assuage guilt. During the Cold War, Americans often used aid to reward loyalty. Most Westerners seemed to view developing nations as basket cases from which little could be expected anyway.

But Moyo does not take sufficient account of the broad reaction against this kind of direct aid beginning in the 1990s. The United States started taking a much more targeted and strategic approach. The Millennium Challenge Account directed new aid to nations willing to work as responsible partners, dedicated to reform and transparency. Initiatives on AIDS and malaria required and achieved measurable outcomes and have often worked through civil society instead of giving money directly to African governments.

Moyo dismisses these efforts, stating that her book is "not concerned with emergency and charity-based aid." But America's AIDS and malaria programs are more than "charity." They herald a new approach to foreign aid -- focused, centrally directed and results-oriented. The President's Emergency Plan for AIDS Relief (PEPFAR), for example, a program I advocated while I worked at the White House, has helped more than 2 million people get treatment for AIDS. The scale of the program has also resulted in the strengthening of African supply, management and human resource systems -- encouraging a professionalism that bleeds through an entire health system and beyond.

But it is perhaps for the best that Moyo did not write on these issues, because she knows little about them. Referring to America's AIDS program, she states: "In 2005, the United States pledged US $15 billion over five years to fight AIDS (mainly through the President's Emergency Plan for AIDS Relief). . . . But this had strings attached. Two-thirds of the money had to go to pro-abstinence programmes." The year of the pledge was 2003. And last year about one-thirteenth of the program was dedicated to both abstinence and marital faithfulness programs. It is not a small thing for an economist to be off by a factor of nine. And it is not a minor thing for Moyo to dismiss and distort the achievements of a foreign aid program that helped save her homeland of Zambia from social and economic ruin. In 2004, 7 percent of Zambians who needed AIDS drugs were receiving them. By September, that figure should exceed 66 percent. AIDS drugs, admittedly, do not guarantee economic growth. But I suspect that a generation of hopeless mass death would have undermined Zambia's economic prospects.

There are other limitations to "Dead Aid" -- its assertion that decimated global capital markets are a ready alternative to aid for African nations; its naive attitude toward Chinese engagement in Africa; its strange contention that African nations might be best served by "a decisive, benevolent dictator."

But Moyo's largest error is an overbroad condemnation of aid itself. "Aid fosters a military culture." "Aid engenders laziness on the part of the African policymakers." Surely there is a difference between aid provided to oppressive kleptocrats and aid given to faith-based organizations distributing AIDS drugs.

If Moyo's point is that some aid can be bad, then it is noncontroversial. If her point is that all aid is bad, then it is absurd. The productive political agenda is to increase the good while decreasing the bad. The productive academic debate is distinguishing between them.

Instead, "Dead Aid" chooses to push the envelope of absurdity, proposing a "world without aid" on a five-year timetable. Moyo does not detail the possible outcomes. But we can reliably predict one of them. Many now alive would be dead.