A Marshall Plan for Africa? Hmm…

I am feenin’ for my podcasts lately, but expensive bandwidth means I rarely get to download to my heart’s content. I took advantage of a recent Safaricom promo to get updated on all the old episodes of NPR’s Planet Money, one of my favorites. On that recent 18-hour drive from Nairobi to Dar, I had more than enough time to catch up on them.

The episode called A Marshall Plan for Africa had me intrigued. It is a criticism of Jeffrey Sachs’s approach to poverty alleviation (big amounts of planned aid) that is quite different, as far as I can see, from Sachs’s arch-critic William Easterly’s position. In the podcast, Glenn Hubbard, a former economic adviser to the Bush administration, describes his vision for lifting Africa out of poverty. Basically, he wants a Marshall Plan-style lending program to fund Africa’s middle class. (He argues that the Marshall Plan was a lending program, not an aid package.)

My ordinary political orientation notwithstanding, I’m more convinced by Hubbard’s plan than Sachs’s. But I’m still skeptical for a number of reasons. (Listening to the podcast first might allow the following to make more sense.)

1. Hubbard is proposing circumventing national institutions to lend to entities of the U.S. government’s choice. This will inevitably have political repercussions and could conceivably be co-opted for political interests.

2. The Marshall Plan worked only after defeating European armies. The United States was able to dictate where its money ended up only after military conquest of the countries where the lending was taking place. We might be able to do the same in Africa, but this, I would think, raises some sovereignty issues.

3. Hubbard says there is something “almost colonial” about China’s investment in Africa — because China is doing it in its own self-interest. This is a little ironic considering points (1) and (2) above, not to mention the West’s historic involvement with Africa, Latin America and Asia. The realist in me also wants to point out that China’s may be a more honest approach than a purportedly altruistic program from the United States. Since any investment in or aid to Africa will necessarily be self-interested, even if they also have good effects, it’s not much of a basis for criticism.

Maybe I’m being too paranoid about the proposal?

3 thoughts on “A Marshall Plan for Africa? Hmm…

  1. I was similarly unconvinced by that podcast, although in retrospect I think some of my reaction had more to do with the universalizing tone of Hubbard’s speech (“giving money to businesses is the silver bullet!”) than with the actual idea of increasing capital for investment. The whole tone of the podcast suggested that Hubbard thinks capital constraints are the prime obstacle to business growth in developing countries, but in many places, I’d guess that infrastructure problems, lack of enforceable contracts, and poor policies (for exports or domestic production) deter potential entrepreneurs before they even get to the point of needing additional capital. Those, of course, are harder problems to tackle from a donor’s perspective.

  2. Rachel, good point. I think the silver bullet aspect is the least convincing part. That got me started thinking about what things could go wrong, and I came up with the points above. In essence, though, it is a really appealing idea.

  3. hi
    I listened to that on a long drive too………….. Nice idea until you think about it. One Reason Marshall Plan worked was that institutions existed – such as markets (goods and capital), different forms of property ownership – and were locally owned and historically rooted.

    Your first point is the killer of course…………..

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