Saturday, April 07, 2007

10 out of 10 for Easterly's "Africa's Poverty Trap"

This is the best short econ article I've read in the last couple of days: "Africa's Poverty Trap", by William Easterly, published in the WSJ on March 23rd (yeah, I'm reading things with a time lag...). Since you need a subscription to read the article directly on the WSJ site, here's a PDF version on Easterly's site. Some representative excerpts:

"There is a sad law I have noticed in my economics career: the poorer the country, the poorer the economic analysis applied to it. "

"There has been progress in many areas over the last 50 years -- ... yet the same poor economics on sale to Ghana in 1957 are still there today. Economists involved in Africa then and now undervalued free markets, instead coming up with one of the worst ideas ever: state direction by the states least able to direct. "

"Despite these reality checks, blockbuster reports over the last two years by the U.N. Millennium Project (led by Jeffrey Sachs), Mr. Sachs again in his book "The End of Poverty," the U.N. Development Program (UNDP), the Tony Blair Commission for Africa, and the U.N. Conference on Trade and Development (Unctad) have all reached what the UNDP called "a consensus on development": Today Africa needs another Big Push. Do they really think nobody is paying attention? "

"Africa's poverty trap is well covered in the media, since it features such economists as Angelina Jolie, Madonna, Bono and Brad Pitt. But even Bill Gates ... expressed indifference to Africa's stagnant GDP, since "you can't eat GDP." Mr. Gates apparently missed the economics class that listed the components of GDP, such as food. "

with a great 'grand finale':

"The free market is no overnight panacea; it is just the gradual engine that ends poverty. African entrepreneurs have shown what they are capable of. They have, for example, launched the world's fastest growing cell phone industry to replace the moribund state landlines. What a tragedy, therefore, that aid agencies have foisted the poorest economics in the world on the poorest people in the world for 50 years. The hopeful sign is that many independent Africans themselves are increasingly learning the economics of how to get rich, rather than of how to stay poor." [my emphasis in bold]

PS1. I wrote a bit about my excellent impression of Easterly's recent book a while ago. I had also read his earlier book and thought it was simply great! If you want to read competent development economics forget about anything else and read Easterly's books and articles.

PS2. I have a deep appreciation (for some of them, superlative!) for artists like Jolie, Pitt, Madonna, Bonno, or for business (and not only) guru's like Gates. I just don't think their competitive advantage is in economic reasoning or rather (not to speculate too much :-)), not always (certainly not when, in a trully amazing 'irrational exuberance', they all believe they can save the world with one- more- big push and thus rally around Jeff Sachs, an economist who's been rather busy lately with increasing his 'popularity' among non-economists, rather than making sure he gets credit among his fellow economists first, they being the only ones who have the expertise to verify his economics advices...).

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