Preface Xl
Unfortunately, it is not just about giving these countries our money. If it were, it would be relatively easy because there are not that many of them. With some important exceptions, aid does not work so well in these environments, at least as it has been provided in the past. Change in the societies at the very bottom must come predominately from within; we cannot impose it on them. In all these societies there are struggles between brave people wanting change and entrenched interests opposing it. To date, we have largely been bystanders in this struggle. We can do much more to strengthen the hand of the reformers. But to do so we will need to draw upon tools-such as military interventions, international standard-setting, and trade policy-that to date have been used for other purposes. The agencies that control these instruments have neither knowledge of nor interest in the problems of the bottom billion. They will need to learn, and governments will need to learn how to coordinate this wide range of policies.
Pg. 5
The concept of a development trap has been around for a long time and is most recently associated with the work of the economist Jeffery Sachs, who has focused on the consequences of malaria and other health problems. Malaria keeps countries poor, and because they are poor the potential market for a vaccine is not sufficiently valuable to warrant drug companies making the huge investment in research that is necessary.
On top of that, if economy is weak, the state is also likely to be weak, and so rebellion is not difficult. Rebel leader Laurent Kabila, marching across Zaire with his troops to seize the state, told a journalist that in Zaire, rebellion was easy: all you needed was $10,000 and a satellite phone. While this was obviously poetic exaggeration, he went on to explain that in Zaire, everyone was so poor that with $10,000 you could hire yourself a small army.
Pg. 21
One of the government’s first acts was to recall a massive public investment project for a dam that had been awarded under the military government. The project was rewarded, but its cost according to the new contract rose from $120 million to an amazing $600 million. Politicians had spent a fortune buying the votes that got them elected, and now needed urgently to recoup their investments; their means to do so was to profit from the damn project.
Pg. 39
The “resource curse” has been known for some time. Thirty years ago economists came up with an explanation termed “Dutch disease,” after the effect of North Sea gas on the Dutch economy; it goes like this. The resource exports cause the country’s currency to rise in value against other currencies. This makes the country’s other export activities uncompetitive. Yet these other activities might have been the best vehicles for technological progress. We are going to meet Dutch disease again when we look at the effects of aid, so it is worth understanding.
Pg. 48
One of the government’s first acts was to recall a massive public investment project for a dam that had been awarded under the military government. The project was rewarded, but its cost according to the new contract rose from $120 million to an amazing $600 million. Politicians had spent a fortune buying the votes that got them elected, and now needed urgently to recoup their investments; their means to do so was to profit from the damn project.
Pg. 49
One of the first restrains, astonishing only in that it had previously been absent, was to require that public investment projects be put out for competitive bidding. When this requirement was first introduced it was made slightly retroactive: some projects that had previously been approved were recalled. The process of competitive bidding reduced the cost of these recalled projects by an average of 40 percent.
