3 of 4 people found the following review helpful
The problem is not Capital,
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This review is from: Dead Aid: Why aid is not working and how there is another way for Africa (Paperback)
I rated this book a 2 star because i agree to one part of the argument that aid is pernicious and malignant but it does not follow that other means of 'funding economic development', which Dr Dambisa proposes, will do any better in development terms.
The aid question is irrelevant because development is not funded by capital (in the sense of money). The problem with Africa is not capital if microcredit has any link to what we call development, then Bangladesh would be a rich country by logic of Dambisa's argument . . that is palliative economies.
Credit does not create development - manufacturing equals development.. Dr Dambisa is therefore addressing the wrong question as so every standard economist. 'Funding of economic development', however one defines that, is not what transformed China or India to middle income countries. Not Japan not the United States in the nineteenth century. A careful industrial/production policy did. Emulation did. Infant industry protection did. So Dambisa is correct to attack aid but for the wrong reason.
Consider this: if one agrees that economic activities varies and some activities are superior than others as carriers of economic development then the comparative advantage argument, that backs free trade, is crushed because nations will attempt to gain production advantage in those activities that are more superior. Then the main problem of Africa is not credit but activity based . . This is where emulation come in.
Emulation is when one country tries to copy the superior economic activities of foreigners. This is how England became rich copying from Venice and the Netherlands. . A recent example of this is Japan copying the auto technology of the United States and Europe - China just now are being accused of copying America technology, YES this is how nations become rich not by sticking to your comparative advantage regardless of its inferiority. Sub-Sahara Africa can never develop until we STOP protecting any foreign intellectual property right, start emulating, and protect infant/local production industries. Development means manufacturing, according to history.
To conclude: I find it upsetting that she would praise Washington consensus and talk about trade without production. Economics, the profession, is trade based. This is why we often argue about free trade and the rest - but no one stops to think about production before trade. The problem with my continent is that we do not produce anything - we have not jumped the mandatory passage point that all developed countries pass through. So discussing aid is as pointless as AID itself. The donors know better and more effective way to 'help' if that really what they want to do, even under Dambisa's theoretical framework. That is, by eliminating the subsides like CAP in the west. They only give aid to feel good about themselves - it has nothing to do with development.
To understand the causes of poverty read [ASIN:1845298748 How Rich Countries Got Rich and Why Poor Countries Stay Poor]]