These commentators seem oblivious to the causes of the global economic meltdown. They have forgotten that in the real world entrepreneurs can be as greedy as public officials. NGO activists do significant good even if at times their engagement has unintended consequences. The world is not defined simply by good and bad guys. In the complex world of development a balance between the priorities of business and the citizens is what can generate progress.

Let me use some examples. The great success stories of development in the post world war II period are seen as Europe, Japan, Korea and Taiwan. In all these cases a mix of trade and aid created the enabling conditions that facilitated this end. Aid was absolutely necessary. The development of Western Europe would have been unimaginable without the role of the Marshall Aid plan. Similarly the Asian countries were a major beneficiary of US aid. UNCTAD’s Economic Development in Africa estimates that $500 million per year was given to Japan by the US between 1950 and 1970. Korea received economic and military investment that amounted to $13 billion between 1946 and 1978, whilst Taiwan received $5.6 billion.

But trade was as crucial as aid. The US provided preferential access to its markets for both Western Europe and its Asian allies. Moreover, it did not demand reciprocal access enabling these societies to develop their competitive capacities before they integrated into the global economy. This restructuring of international trade by the US in favour of its allies was crucial for the development of Western Europe and South East Asia in the post-world war II period.

But why did both the US and national elites act in ways that were systemically beneficial. Chalmers Johnson explicitly accounts for the rise of the Japanese economic model by arguing that it was essentially a product of the cold war and the competitive relations between the US and Soviet political elites. Other more recent accounts speak of systemic vulnerability generated by specific political, security, and financial conditions, and yet others highlight the role of social mobilization and extra-institutional popular action in prompting these elite coalitions in the direction of broader developmental outcomes.

These accounts demonstrate that appropriate development policies are not simply the product of good political leaders or clever technocrats. Rather they emerge within particular political circumstances that are distinguished by a dispersal of power. At the international level, competition between equally powerful states is good for development because it conditions international political elites to act in ways that favour developing nations. At the national level, the experience of West European nations, including Norway, and Asian countries like Malaysia, suggest that a robust civil society, including powerful trade unions, is important for conditioning local political elites to adopt policies and behave in ways that are facilitative of poverty alleviation and national development.

But the competitive international environment during the cold war did not benefit Africa. How then can its elites avoid a repeat of this experience? How can they ensure that they are able, like the Asians and Europeans, to use the competitive international environment to facilitate their own development? Two preconditions would be required for this outcome in this era. First, African political elites must develop the political will to pursue a comprehensive development agenda that benefit their citizens. And, as the European and Malaysian experience indicates, such a political will can emerge when the political elite are kept in check by a plural political system and/or an independent robust national civil society. Where this does not exist as in Gabon, Ethiopia and Sudan, these political elites easily become proxies for foreign powers and interests. Substantive democratization, then, facilitates the accountability of their elites to their citizens thereby enabling them to develop the political will to pursue a comprehensive developmental agenda.

Second, African political elites would have to be much more cohesive at the continental level if they are to be able to use the competitive international environment to their collective advantage. Such cohesion could emerge from initiatives towards a continental unity. What form would this take? Some would argue for a pan-African solution in the form of a United States of Africa. While such a development would be positive, it is for all practical purposes unfeasible in the short to medium term. But a Continental Charter of Rights governing investments and engagements on the continent need not be? Such a charter, which would have to be negotiated in the African Union, could supersede bilateral agreements and force all external, and maybe even continental, powers to accord to a specific set of business and diplomatic practices. Of course the administrative weaknesses and the capacity constraints of the AU may hinder compliance. But if such a charter were to be agreed to by the AU, it could be subsequently ratified in the UN, thereby extending and strengthening its institutionalization, and enhancing the reach of its compliance.

What are the lessons for Mills and McNamee? Simplistic solutions will not facilitate development. Neither will sloganeering. Lesson one: both Aid and Trade is necessary. The question is how is the Aid deployed and how is the Trade organized. Lesson two: an enabling political environment both at the national and international level is essential. How to organize the political system to enshrine accountability of political and economic elites to the citizens, and how to play off foreign powers in the competitive international environment so as to facilitate national development needs is what is at issue. Is it not time for us to get to the crux of the debate and reject fundamentalism in all its forms?

Jonathan Glennie’s book, coming in the wake of a growing number of critiques of the international aid, shows just how flimsy are the intellectual foundations of the aid-for-development experiment. Even before the financial crash, the promises of huge increases in ODA to reduce world poverty were becoming increasingly doubtful.

One of many ironies of this situation is that most of the proponents of aid—including its most ardent advocates such as Jeff Sachs—have all along promoted ODA as part of a wider package that includes debt relief, trade reform and improved economic governance in developing countries so as to generate improved investment and growth. Aid has been seen as just one of the instruments for economic growth, and arguably the least important one. But, aid seems to displace the other parts of the development debate. Of the other pillars, only debt relief has seen any significant progress in the last ten years. Trade reform and economic governance are much harder, and far less progress has been made.

Aid donors and recipients alike have good reason for preferring to focus on aid rather than trade or governance. Industrialized countries don’t want to liberalize trade in agricultural products, while making new commitments to aid targets provides popular headlines. African governments like aid because most of it comes to them, and while they are strongly in favour of trade reform they are understandably resistant to governance reform. Therefore we see that NEPAD began with a focus on governance, trade, and debt, with aid at the margins, but was reduced very rapidly to an aid disbursement mechanism.

Even before the financial crisis hit last year, the limits of the ODA-driven response to global development needs were becoming apparent. The system is geared far too much to vertical systems which can generate short-term monitorable results. It is inefficient, with dozens of parallel aid missions in recipient countries all doing much the same thing. It is open to manipulation and abuse to support other policy objectives of donors and lenders, which as Glennie explains, undermines the stated objective.

All these shortcomings are politically tolerable in donor countries. What will make the existing system unmanageable is that cannot generate or disburse the scale of funding needed to respond to mitigate the impacts of climate change, let alone finance the transition to a low-carbon energy system. However, for so long as nobody has a practicable idea for what can replace the current system, ODA seems set to continue. At the moment, that serves the purpose of pretending to get to grips with these momentous challenges.

In the book I argue that campaigning for more aid should be a low priority for those concerned about poverty reduction, human rights and democracy in Africa. The optimism that aid is making a big difference to the lives of poor Africans is not shared by most analysts on the African continent. In a literature review carried out for the Overseas Development Institute, Moses Isooba of Uganda’s Community Development Resource Network found that, ‘A majority of civil society actors in Africa see aid as a fundamental cause of Africa’s deepening poverty.’ Rather than accepting the simplistic notion that more aid equals less poverty, we need to look at the evidence. All of it. In contrast to aid optimists and aid pessimists, who selectively use evidence either to support or dismiss aid, this “aid realism” recognizes that the impacts of aid are complex.

I break down aid’s impacts into four categories. Direct impacts are the easiest to measure and are the ones we hear about most in the media – how many people have been vaccinated, how many schools have been built, and so on. These impacts are very often positive. Receiving large amounts of aid also has macroeconomic consequences because large inflows of foreign money affect prices and incentives. But the two most important impacts, and potentially the most harmful, are aid conditions and aid dependency. The new global context offers new possibilities to make progress on these two vital issues which Africa campaigners must seize before the window of opportunity closes.

The policy conditions attached to aid have arguably had greater consequences in the lives of Africans than the direct impacts of the way the money has actually been spent. Within two decades the whole economic direction of a continent has changed, largely as a consequence of aid, and while some people have gained, many more have suffered as a result. But now the credibility of donor countries to insist that recipients adopt certain economic policies has been severely undermined. The failure of these donors properly to regulate the financial markets is the main cause of the current global meltdown. Meanwhile western governments have elaborated huge spending plans not only to nationalise banks, but also to protect key industries from collapse – policy options effectively denied to African countries facing far greater crises in the last few decades, at the insistence of these same governments. One of the key calls I make in the book is that the arrogance with which a specific set of liberal economic policies are being foisted on Africa must stop, and that the coming decade must be a decade of policy freedom, in which African governments are allowed to govern as they see fit. Reduced confidence in the West’s economic model brings this objective a few steps closer – campaigners should turn up the heat.

It is generally agreed that shortcomings in the accountability and effectiveness of African governments in recent decades have been a major part of the problem of low or negative growth and insignificant poverty reduction. What is less discussed, but is becoming increasingly clear, is that dependency on aid from foreign donors has undermined the development of the basic institutions needed to govern and the vital link of accountability between state and citizen. According to Siapha Kamara of the Social Enterprise Development (SEND) Foundation of West Africa, ‘the more African governments are dependent on international aid the less ordinary citizens such as farmers, workers, teachers or nurses have a meaningful say in politics and economic policies.’1

The overhaul of the global financial system now being called for by the world’s leading governments provides a unique opportunity to undo some of the measures that until now have prevented Africa from maximising its development resources. One key aspect that is coming under increasing scrutiny is the complex global web of tax havens that serves no serious purpose for rich nations or poor, but is responsible for allowing dodgy deals, theft and crime to abound. Africa loses far more every year through capital flight to tax havens than it receives in aid. Plugging this leak, cracking down on corruption (including the demand side), and building better financial systems which, among other things, could make more credit available to small and medium sized businesses, would open the way to reducing dependence on aid. Such possibilities have also become more likely since the crisis began.

In many countries aid has done more harm than good. Rather than seek more of it, most African governments should set out plans to reduce the amount they receive over the next decade or so. Even when it is playing a positive role, which it certainly can sometimes, aid is far less important than a whole range of other measures rich governments need to take to support development in Africa. Campaigners should spend their limited time and resources on more important issues that would make a substantial and sustainable difference to Africa – I make suggestions for what these should be in my book.

African countries have reduced poverty when they have implemented the right policies, and when foreign governments have taken supportive measures. Aid has been at best marginal to this effort, and at worst has frequently undermined it. In 2009 the opportunity exists for African governments to make strides towards policy freedom and aid independence. It will not be easy, but the course should be set.