My former MPAID student Varad Pande refers me to a new piece by Jeff Sachs in Fortune. Here is the gist of it:
[T]he core problem in Africa is not corruption but the lack of basic infrastructure and services. Like all poor regions (and rich nations like the U.S.), Africa has its corruption problems, but they do not explain its distinctively poor economic performance.
The causes are obvious to anyone who has spent a few days in African villages. There are almost no roads, electricity, doctors, nurses, fertilizers, high-yield seeds, and all the other things that constitute the first step out of extreme poverty.
These villages live at subsistence or below, trying to eke out survival on soils depleted of nutrients, with children dying of malaria and mothers and fathers dying of AIDS, and without the most rudimentary help of technology.
When poor American farmers lacked electricity, the U.S. established the Rural Electrification Administration in 1935 to provide low-cost credits to bring electricity to the countryside.
When India needed a Green Revolution in the 1960s, the Rockefeller Foundation brought high-yield seeds, and the U.S. government shipped massive amounts of fertilizer.
When China's countryside needed roads and electricity, the Chinese government, not the private market, did the job, and the World Bank helped with financing.
Yet when it comes to Africa, according to Washington's free-market ideologues, all those wonderful things are supposed to spring up by themselves, with markets coming to the rescue. And when those things don't arrive, since there is no way to pay for them, African governments are blamed for corruption.
As any junior IMF staffer could tell the bank in a heartbeat, the African governments do not have the fiscal means to invest in what's needed, and that would be true even if Mother Teresa were running the local treasury.
New bank chief Zoellick needs to tell his staff that their jobs depend on meeting the goals in Africa. Here are four areas where the bank can have a quick and dramatic success:
- It can help Africa raise food production at least 50 percent by 2010. Malawi introduced a voucher scheme to ensure that every farmer could obtain fertilizer and high-yield seed. This program could be implemented Africa-wide within two years. African governments are ready, and the Gates and Rockefeller foundations will provide valuable support.
- The bank can help Africa defeat malaria. By 2010 every sleeping site in malaria-transmission regions can be protected with a long-lasting bed net, and every village can be protected with first-line medicine. More than one million lives per year can be saved, with massive add-on effects on schooling and harvests.
- It can help Africa achieve electrification by 2015. It is a cruel myth that development without electricity is possible in the 21st century. Rather than helping countries ship their oil abroad and then remain dependent on wood for energy, the bank should be helping Africa develop its hydrocarbons to support regional power grids.
- The bank urgently needs to help Africa finance roads and rail upgrading, starting with a major highway (rather than a two-lane, broken- down road) linking the port of Mombasa in Kenya with Nairobi and Uganda, Rwanda, Burundi, and eastern Congo. A road and rail network would enormously expand trade between Africa and the world.
Seasoned practitioners not held back by ideology and posturing know how rapidly results can be achieved. The philanthropy Millennium Promise, which I helped start, has raised over $100 million in private funds for Millennium Villages. This demonstrates how rural life can be improved dramatically from one season to the next.
Sachs makes it all sound so easy, as if we have all the answers, and all we need is to put the money and the programs in place. I want to believe with all my heart that he is right, and yet most of what I know about development tells me that Sachs is approaching things from the wrong end--dealing with the symptoms of underdevelopment--lack of resources of various kinds--rather than its fundamental undrerlying dynamics.
Sachs does have a version of these dynamics, which is the idea that African nations are unable to grow out of poverty because investments in health, education, infrastructure, and technology are all subject to significant returns to scale at low levels of development. Hence in the absence of a coordinated big push in all these areas, these countries get stuck in a "poverty trap."
The trouble is that the evidence in support of generalized poverty traps is extremely weak. I am inclined to believe that the underlying constraints differ from country to country and therefore require a different sequence of reforms in different settings. In any case, without understanding the true dynamics I am afraid Millennium Villages will remain a success only as long as Sachs and the outside world keep the spotlight shining on them.