Being sympathetic to the aid skeptic argument, I may surprise some readers in being skeptical about today's highest profile aid skeptic, Dambisa Moyo. The basics of the story behind Moyo are well-known: Aid skeptics have typically been dowdy white guys from industrialized countries. Then, all of a sudden, this attractive Zambian woman--formerly of Goldman Sachs--releases a book on Dead Aid as a spin on Live Aid and receives a boatload of attention in the process. In response, the aid fundamentalists are all over her case. It's a sad reflection of our times when celebrity seems to be mistaken for genuine intellectual achievement, but I'm afraid that's largely the case here. As many commentators have already pointed out, Moyo regurgitates a lot of aid skeptic rhetoric, the only revision being that its new champion is an African woman.
There's also the exceedingly troubling recommendation by Moyo that African countries rely more on capital markets for their funding instead of foreign aid. I suspect that Moyo wrote this book during a time when her former employer, Goldman Sachs, and other Wall Street firms were high in the saddle prior to the subprime debacle. At the time, spreads for emerging market debt was at historic lows (and stock markets at all time highs). With these factors now reversed and the EMBI+ at nearly 5.00%--and even higher for several African countries--Moyo's recipe is one of creating more heavily indebted poor countries. Then again, true believers in the salvific powers of the Anglo-Saxon model tend to overlook these considerations despite evidence of the pitfalls involved--especially in countries with still-limited institutional capacity. Although spreads have come down somewhat, they are nowhere near where they were before on emerging market debt:
As someone not particularly enamored with celebrity culture, I think "Hey, look at me--the Zambian William Easterly" doesn't count for much. Indeed, while Easterly supports Moyo for essentially this reason (an African assumed to be speaking about the plight of Africans), I cannot say that she adds anything to what he's already expressed in The Elusive Quest for Growth and The White Man's Burden. Worse, the numbers she does cite to back up her assertions are dubious. Moyo has written more of a polemic, with not much attention paid to the vast, vast development literature on aid's efficacy that has accumulated over the years. If you want such an overview, the more neutral Roger Riddell probes the question of Does Foreign Aid Really Work? in far greater depth than Moyo's skimpy volume. For someone with a PhD in economics, Moyo does not demonstrate much familiarity with the pertinent literature on development. Riddell might not be a talk show fixture, but those more interested in gaining a better understanding of aid's history will gain much more from him.
You also have to consider that several books have followed the same formula of catchy title plus skepticism about aid. Others have said it earlier--and better. Accordingly, there are several ones which I would recommend well ahead of this one. Michael Maren's The Road to Hell (is paved with good intentions) dating from 2002 comes to mind. If you're more interested in reading about the political economy underpinning the aid industry, you can can read James Ferguson's The Anti-Politics Machine. There's also Nicholas van de Walle's African Economies and the Politics of Permanent Crisis. Or, if you're into how aid dispensed according to geopolitical objectives can hinder development and prop up dictators, there's In the Footsteps of Mr. Kurtz. by Michela Wrong. With regard to microfinance, you can do much better than accept Moyo's umpteenth recycling of the Grameen Bank story for a broader look at the issues involved in microfinance with books such as Beatriz Armendariz and Jonathan Morduch's The Economics of Microfinance.
Nevertheless, the Bonos and Sir Bobs of this world deserve Dambisa Moyo. The aid fundamentalists have long been hogging magazine covers and talk shows. It's about time the opposite camp got a charismatic and photogenic equivalent to balance out the debate in the court of public opinion. How aid is used is certainly an important topic for discussion at a time when developed countries themselves are strapped for cash given a global financial crisis. Raising awareness counts for something. However, when it comes to serious discussion about the issues at hand, I would tend to lump Moyo with Bono and Sir Bob as less-than-authoritative voices. To paraphrase Sir Bob, you can give them the bleeping air time--but not the far weightier policy debate.
If aid dependency is undesirable, I cannot say her prescription for the Goldman-Sachsonization of Africa is necessarily better.