Waylaid Dialectic

April 20, 2010

Back to the Future!…no wait, um…Forward to the Past!

Filed under: Aid,China — terence @ 8:47 am
Tags: , ,

Over at AidWatch Laura Freschi interviews Deborah Brautigam. The subject: what western aid donors can learn from China’s aid to Africa.

[Freschi]: It’s my reading of your book that you think Western donors could learn something from the way China behaves in Africa. What are the strengths of the Chinese way? Are there specific strategies or programs that the West should pay attention to?

[Brautigam]: As a donor, China’s way has several advantages. Take the way they operate. They rarely “poach” skilled staff from African ministries to work in their own offices. The focus on turnkey infrastructure projects is far simpler and doesn’t overstretch the weak capacity of many African governments faced with multiple meetings, quarterly reports, workshops, and so on. Their experts don’t cost much. In addition, their emphasis on local ownership is genuine, even if it leads to projects like a new government office building, a sports stadium, or a conference center. They understand something very fundamental about state-building — something that Pierre L’Enfant understood in 1791 when he teamed up with George Washington in newly independent America: new states need to build buildings and dignity, not simply strive to end poverty.

But the Chinese also funded university scholarships, roads, bridges, mini-hydropower, and irrigation, for decades — when other donors had moved away from most of these sectors. And like Japan, they see nothing wrong with using subsidies to help foster investment by their own companies; this is seen as beneficial to both sides. From the 1970s to the early 1990s, Southeast Asia’s “miracle” was underwritten not only by good policies, but by Japanese investment, and Japanese aid was a partner in this. These investments boosted manufacturing prowess, attracting Japanese firms to go offshore. China’s engagement in Africa could have similar results in at least a handful of countries with receptive leadership. The Chinese avoid local embezzlement and corruption by very rarely transferring any cash to African governments. There is almost no budget support, no adjustment or policy loans. Aid is disbursed directly to Chinese companies who do the projects.

In short: employ expats, build infrastructure, provide project aid, and give tied aid.

Brautigam’s work seems interesting and, for what it’s worth, I’ve a sneaking, guilty sympathy for project aid, am not anti-infrastructure, and accept that there are meaningful trade-offs between employing expats and employing locals (future posts on all these topics, I hope) but can I just point out the bleeding obvious for a second:  Western donors did all this, for about three decades, with very mixed results. Lots of white elephants, ‘boomerang aid’ (so-called because the lion’s share of it returns to the countries of origin), and grotesque corruption.

Also worth noting is that Chinese experts don’t cost much for the same reason that Chinese garments are cheap – wages are low in China. And there’s not much that Western donors can do to replicate this with their own expats (although they could, I guess, employ Chinese). Also, Australia and New Zealand, at least, never moved away from scholarships. And I can tell you from experience that such scholarships are no less problematic than any other form of aid.

Like I said, Brautigam’s work is interesting and the whole interview is well worth reading (thanks to AidWatch for posting it!) but having read it I remain a sceptic as to whether the west has much to learn from China’s aid practices.

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5 Comments

  1. I read the article at Aidwatch and couldn’t figure out what didn’t seem right…

    Thank you very much for putting words to what I felt in my backbone, and please keep up the good work 🙂

    Comment by Mathias S Kirkegaard — April 20, 2010 @ 10:34 am

  2. You’re welcome Mathias and thanks for becoming the first ever commenter on this blog 🙂

    Comment by terence — April 20, 2010 @ 1:36 pm

  3. wuhuuu

    Comment by Mathias S Kirkegaard — April 21, 2010 @ 12:37 am

  4. If you have read Professor Brautigam’s book carefully, you should have known Chinese companies employ not only expats, but an average of 70% of local workers.

    “Western donors did all this, for about three decades, with very mixed results. Lots of white elephants, ‘boomerang aid’ (so-called because the lion’s share of it returns to the countries of origin), and grotesque corruption.”

    Roads and dams benefit the locals, and again Professor Brautigam argues the money never go directly to the host country’s bank account, and as Peter Lee pointed out, you can’t put a highway into your Swiss account.

    http://current.com/shows/vanguard/89565630_chinatown-africa.htm

    Comment by wei — April 24, 2010 @ 2:54 pm

  5. Hi Wei,

    I haven’t read Ms Brautigam’s book. I’m merely replying the comments she makes in her Aid Watch interview.

    For what it’s worth though, you’ll note – upon a careful re-reading of my post – that I’m neither criticising China’s aid hiring policy or saying that there is anything inherently bad about big infrastructure projects. It’s just that – as the World Bank has discovered with Dams – large infrastructure projects in developing countries are incredibly fraught. It is very easy to design projects who hurt more people than they help. (Some) Donors have learnt from this (somewhat) and are now much more careful when investing in infrastructure – witness the World Bank’s more recent dam work in SE Asia. I don’t have a problem with Chinese aid going to infrastructure – I just doubt there is much to be learnt from their approach.

    Also, it’s true you can’t put a highway, or a dam, in a Swiss Bank account, but the production of these large undertakings usually comes with enough spin offs that at least a few people’s bank balances will benefit. Once again, this doesn’t mean that donors shouldn’t do large infrastructure it just means that it is a tricky business.

    Finally, while there are pros to not using host government bank accounts (a reduced risk of corruption as you note) there are also costs – particularly the issues of creating parallel systems while weakening government ones. It’s not a clear cut debate, and will I hope be the subject of a future post here, but to me at least the “China’s doing it the right way and the west should watch” take on it is too simplistic by quite some measure.

    Thanks for your comment.

    Comment by terence — April 24, 2010 @ 4:02 pm


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