By Yawa Osebreh, Class of 2006
Ashesi's class of 2006 was privileged to have Professor William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misventures in the Tropics," deliver a lecture on the effects of foreign aid on developing economies. Professor Easterly, who formerly held a position at the World Bank, related to students that he resigned from this career due to his disillusionment with the policies of aid donors. He joined the faculty of New York University to gain the academic freedom to write about his experiences in international development.
His lecture centered on the mistaken ideologies, what he referred to as "myths," employed by aid agencies when determining how to distribute aid to developing countries. These "myths" include the belief that money is all-powerful; bureaucracies are all-seeing; interventions are all-transforming; and that markets are all-enriching. He stated his belief that money can buy neither love nor development. In his view, money inflows do not necessarily finance investment; rather, incentives direct money to consumption. He decried the over-emphasis on the quantity of aid donated in the form of money, machines and schools rather than focusing on trying to change incentives in targeted sectors of the economy.
Professor Easterly observed that poverty reduction strategies require deep changes in institutions that affect incentives in both the private and public sectors. He conceded that such changes require a lot of time. However, he believes that tremendous benefits would be realized from such changes and are worth the wait. Development, he argued, should be done one village, town or city at a time.
In his closing remarks, he highlighted many of the negative effects associated with foreign aid. International financial institutions like the IMF and World Bank, in his opinion, should be held accountable for their past and present failures. He noted that the way forward for third world countries should be "free markets" that encourage development. He believes that there will always be class distinctions within every society so disparities between rich and poor should not be a hindrance to the implementation of "free markets." As a consequence, "We need a revolution in development thinking and practice."