Topic > Analysis of Dead Aid by Dambisa Moyo: Why Aid Is Not...

Dambisa Moyo, originally from Zambia, is an economist and author of the controversial book: Dead Aid: Why Aid is Not Working and How There is a best way for Africa. This highly controversial book explores foreign aid and how it has harmed Africa, and in turn offers "solutions" for how Africa can prosper without foreign aid. Moyo offers four sustainable sources of financing that will allow Africa to prosper: free trade in agricultural products, encouragement of financial intermediation, large-scale foreign direct investment, and access to international capital markets (9). By reducing trade restrictions there are no import tariffs, no export subsidies, no quotas, this would allow mutual benefits from the exchange of goods and services by both partners. (1). The book calls for the US, EU and Japan to allow African countries to increase earnings from exports of primary products by eliminating the various subsidies they pay to their farmers, allowing Africa to focus its efforts on producing products or supplying of services where they have a clear comparative advantage ( 9). An entity that acts as an intermediary between two parties in a financial transaction is the purpose of financial intermediaries, which can offer great benefits to African consumers such as: security, liquidity and economies of scale (2). Therefore, Moyo suggests that by encouraging the spread of microfinance institutions, such as those that have flourished in Asia and Latin America, this will encourage financial intermediation (book). Large-scale direct investments, such as those offered by China, could allow African countries to experience growth in workforce, technology, facilities and operational management. (7) Foreign direct investment has enabled Ghana to transfer general knowledge and specific technologies in production and distribution, as well as industrial upgrading, work experience for the workforce and the introduction of modern management and accounting methods. This has increased the productivity of capital, influencing its competitiveness and attracting new capital in more positive terms, expanding strategic inputs into the traditional export sector to expand the volume of trade to improve production through product and process innovation, and increasing overall growth (6). As you can see, Ghana has prospered thanks to some of Moyo's solutions, however there is no denying that Ghana is a country still dependent on foreign aid. Therefore, one can come to the conclusion that sustainable sources of Moyo discoveries can achieve growth in Africa, but that aid does not necessarily mean harm.