Does aid to Africa undermine the emergence of a robust African middle class? If so, what can be done about it? In this new working paper, CGD president Nancy Birdsall argues that high and unpredictable aid flows could be making life harder for Africa's small and medium-sized businesses by, for example, inflating wages and making governments less reliant on domestic revenue—and hence less accountable to taxpayers. She urges that donors systematically monitor such impacts in aid-dependent countries and suggests ways that aid could help to bolster Africa's crucial but fragile middle-income groups. Learn more
Bill Easterly calls Moss's new introduction to Africa "compulsively readable and accessible" and "a masterpiece of clear thinking." Each chapter is organized around three fundamental questions: Where are we now? How did we get to this point? What are the current debates?
In this book, Nicolas van de Walle identifies 26 countries that are extremely poor and grew little if at all in the 1990s. His sample excludes North Korea and countries where civil war explains some of their failure to grow (Afghanistan, Sierra Leone, Sudan, Tajikistan and others). The 26 countries have limited infrastructure and human capital and the small size of their markets deter private savings and investment. Aid was meant to help overcome these problems, and these countries received a lot. Yet they have failed to grow. What is wrong? Is foreign aid a solution or part of the problem? What changes might make aid more effective? Given these countries require the financial and technical resources of the West, why haven’t aid programs made a difference?
Although nearly all poor countries are classified by the World Bank as IDA-only, Nigeria stands out as a notable exception. Indeed, Africa’s most populous country is the poorest country in the world that is not classified as IDA-only. Under the World Bank’s own criteria, however, Nigeria has a strong case for reclassification. IDA-only status would have two potential benefits for Nigeria. First, it would expand Nigeria’s access to IDA resources and make the country eligible for grants. Second, it would strengthen Nigeria’s case for debt reduction. With a renewed economic reform effort getting under way and the emerging use of debt reduction as a tool for assisting economic and political transitions, the UK, the US, and other official creditors should support such a move as part of a broader strategy for encouraging progress in one of Africa’s most important countries.
The US government's proposed $5 billion Millennium Challenge Account (MCA) could provide upwards of $250-$300m or more per year per country in new development assistance to a small number of poor countries judged to have relatively "good" policies and institutions. Could this assistance be too much of a good thing and strain the absorptive capacity of recipient countries to use the funds effectively? Empirical evidence from the past 40 years of development assistance suggests that in most potential MCA countries, the sheer quantity of MCA money is unlikely to overwhelm the ability of recipients to use it well, if the funds are delivered effectively.
The welfare of the poor turns in large measure not only on technocratic development "policies", but the effective delivery of key public services, core elements of which require thousands of face-to-face discretionary transactions ("practices") by service providers. This paper presents eight current proposals for improving service delivery, on the basis of a principal-agent model of incentives that explores how these various proposals change flows of resources, information, decision-making, delivery mechanisms, and accountability.