Effectiveness of Foreign Aid in Zambia

MASTER EN ETUDES DU DEVELOPPEMENT GLOBAL POLITICAL ECONOMY

THE EFFECTIVENESS OF FOREIG AID CASE STUDY: ZAMBIA

Written by: Academic Year: Professors: 2008 -2009 (Spring) Cedric DUPONT Daniel TRACA Uliane APPOLINARIO Email: uliane.appolinario@graduateinstitute.ch Geneva June 08th , 2009

Effectiveness of Foreign Aid in Zambia

Table of Contents Introduction 2

1. Contextualizing Foreign Aid - The Theoretical Framework about Aid Effectiveness 1.1 Aid and Development Theories 1.2 The Big Push Model 1.3 The Paradox of the Lack of Growth: Failure of Aid? 1.4 Aid and Policy: a New Perspective 1.5 Aid: Is it Working or Not? The debate Easterly x Sachs 2. The Main Constraints of Foreign Aid in Sub-Saharan Africa 2.1 What is Wrong with Sub-Saharan Africa? 2.2 The Problem of Ownership x Policy-based Conditionalities 2.3 World Bank Policies and Reform Strategies 3. Case Study Country Aid Effectiveness in Zambia 3.1 Problem Overview 3.2 Aid and Policy in Zambia 3.3 The Kaunda Years 3.4 The Reform Period under MMD 1991 3.5.1 Evolution of Social Indicators 3.5.2 Economic Growth: The Failure of decade Lost 3.5.3 Aid Dependency 3.6 What has gone wrong? And what can be done? 4. Conclusion 5. Bibliography 19 21 21 23 27 28 30 32 33 34 13 14 16 4 4 7 8 11

3.5 Analytical Framework : The outcomes of a decade of failed reform in Zambia

Effectiveness of Foreign Aid in Zambia

Introduction William Easterly started his article Can Foreign Aid Save Africa presenting his scepticism on the good intentions at the attitude of some governments to increase the amount of foreign aid to very poor countries in order to help their population which is dying of hunger and serious diseases. He mentions the speech of Gordon Brown, the UK Chancellor when he called for a doubling of foreign aid in January 2005 in an attempt to show how easy to do good is. Others world leaders have also called upon a big push in Africa to end poverty, and people ask if a Marshall Plan to Africa could not save this country. In July of 2005, the G8 agreed to double foreign aid to Africa, from $ 25 billion a year to $ 50 billion to finance the big push (Easterly, 2005). Today, this amount of cash has been certainly compromised specially by the current financial crises, and even the promise of the new president of the United States of America, Barack Obama, before being elected, of doubling the foreign aid to Africa will certainly not be achieved. But despite the monetary amount of money invested to save poor countries , we might rather question: Has this aid been effective? Many studies have showed that not, or at least, not proportionally to the amount of aid. In this sense, the effectiveness of foreign aid has been the reason of a growing number of debates and academic productions in the last years. A considerable number of studies and researches show that after some decades of increasing volume of financial flows to poor countries, the results seen today are substantially far from the expected result of the foreign aid to the recipient countries (see for example). Thus, the main reason for the increasing number of debates around this theme reflects the attempts to address a main problematic: Why aid is not showing the results that it was supposed to show? In other words: Why increasing flows of investments sent to poor countries are not being able to promote economic growth and social development? And following: What can be done to achieve a more effective foreign aid? A exhaustive - but not conclusive - literature has already been trying to answer these questions and thus, my main interest on this work is try to discuss critically some of these works with a main focus on questions which will be raised starting 3

Effectiveness of Foreign Aid in Zambia

with the analysis of the theoretical debate around the effectiveness of aid as well as the study of some data and evidences ins Sub-Saharan Africa. The methodology adopted in this paper presents as follows: With basis on this theoretical debate as well on the evidences that I have found and which will be presented further, I will focus my study on a central question: Which are the main factors that lead to the failure of foreign assistance in SSA countries both to improve the quality of institutions as well as to reduce poverty? My main argument to this question is that: The lack of confidence by the donors regarding the government of recipient countries, has motivated the formers to adopt a high number of conditionalities which had a negative effects both to ownership of the aid and to the political environment of the recipient countries. The country case study considered in this paper will be used in order to try to verify the feasibility of this argumentation. Zambia was chosen for presenting a challenging case, but despite of the specificities of this country, it can be considered to be an illustrative case, which can somehow represents the course followed by most of sub-Saharan countries in the last 30 years of foreign aid1. Finally, I will divide the study as follows: Session 1 will present a brief contextualization of the foreign aid and the evolution of the debate around aid effectiveness. Session 2 will present the main constraints of foreign aid to SubSaharan Africa giving a special attention to the World Bank policies and the conditionalities of the structural adjustments and finally Session 3 will provide an illustration through the study of the case of Zambia.

There are a lot specificities among the countries in Sub-Saharan African, but a general trend that reflects the most of these countries followed unsuccessful plans of adjustments, high level of endebtness and rise of indicators of poverty. Most recently, the World Bank has published a study named Aid and Reform in Africa where there is a compilation of analysis of ten SSA countries. The World Bank classifies the ten countries according to the success of implementation of reforms and improvement of institutions in (1) successful reformers, (2) Post-Socialist reformers, (3) Mixed reformers and (4) Non-reformers. But paradoxically, even the successful reformers, Ghana and Uganda, were not able to pay the external debt and had to have the debt cancelled.

Effectiveness of Foreign Aid in Zambia

1. Contextualizing Foreign Aid - The Theoretical Framework about Aid Effectiveness 1.1 Aid and development theories In this session, I will present a brief literature review that has been trying to raise the main concerns about aid effectiveness. A very important point to be highlight before starting our review is that aid strategy was somehow related to the mainstream development though of each decade. To broadly sketch (and oversimplify the changes), in the 70s the main emphasis was to improve the world income distribution by directing aid more to the poorest nations. In the 1980s, there was increased awareness of the importance of government policies to give favourable incentives to the private sector, get prices right, facilitate free trade and maintain macroeconomic stability. This was reflected in a concrete policy change: the introduction of the structural adjustment lending by the World Bank and the international Monetary Fund in 1979-80 to give loans to developing countries conditional on them adopting these policies. Then beginning in the 1990s, there was increasing emphasis on the quality of government institutions such as democracy, accountability and control of corruption. The new approaches in the 1980s suggested that individual projects would have high returns only if national government policies were favourable, and then beginning in the 1990s only if institutions were supportive (Easterly 2007). All these approaches to development will serve as a support to the allocation of and the pattern of foreign aid. We will see more detailed this discussion in the present topic. 1.2 The Big Push Model The macroeconomic theoretical basis to promoting financial aid has appeared on 1950s and had as the starting point the Big Push Model. Briefly this model states that Africa is poor because the continent is stuck in a poverty trap. To get out of the poverty trap, they need a large aid finance increased in investments, which would be the Big Push. In this sense, the Harrod-Domar growth model was extensively used to discuss the mechanisms of how a poverty trap arises. According to this model, a determined level of savings is necessary to promote 5

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stability and growth of the economies. If saving is too low to keep up with population growth and the depreciation of capital, then per capita growth will be zero or negative (Easterly 2005). Thus, some development economists in 1950s and 1960s postulated a desirable per capita growth rate and calculate the investment requirement to meet this target the distance between the low domestic saving rate and the investment requirement was called the Financial Gap. In this sense, the role of aid was to fill this financial gap (Rostow 1960) (Chenery 1996) (Easterly 2005). Later, by modifying the rigidities in the growth model and introducing the trade deficit, the two-gap models developed by Chenery and Bruno (1962) and Chenery and Strout (1966) improved on the analytical framework. Taylor (1988, 1990) and Bacha2 (1990) introduced the fiscal gap as another constraint requiring external financing to augment governments tax effort in a noninflationary way. The two major conclusions that emerge from the literature with respect to the effectiveness of aid are that: (i) foreign aid should aim at raising domestic savings to a level sufficient to finance the investment needed to sustain the targeted growth rate of GDP; and (ii) foreign aid should not discourage the recipient countries from seeking to relieve the foreign exchange constraint by improving competitiveness a and export diversification (Agrawal 1993). The empirical relationship between the size of foreign assistance and its impact on both the GDP growth rate as well as domestic savings behaviour has been extensively debated. Some studies have questioned the usefulness of aid and showed that there is little or no correlation between aid inflows to developing countries and their GDP growth rates (for example, Gupta and Islam, 1983; or Mosley, 1987) and also that there is a negative impact of increased foreign aid on domestic savings (for example, Weisskopf, 1972). Other studies, however, do not confirm these relationships and there are a multitude of studies that have generally concluded that aid has been beneficial to the growth prospects of developing
2

Citation of Nisha AHMED, Zafar MERDED, Michael and NORDL, Roger Agrawal, Structural Adjustment, Economic Performance and Aid Dependency in Tanzania , Working Paper Series Country operations, Eastern Africa Department The World Bank and Fiscal Affairs and African Departaments and International Monetary Fund Deepa.lments InternationMaol netarFyu nd (Washington: World Bank, 1993), 1-28.

Effectiveness of Foreign Aid in Zambia

countries (for example, Cassen, 1986; or Riddell, 1987)3 (Agrawal 1993). 1.3 The Paradox of Lack of Growth: Failure of Aid? All these studies have in common the analysis of the role of aid under macroeconomic aspects. Today it can be considered a simplistic view because it started with the assumption that just a flow of capital entering the treasure of the recipient country can have a positive effect that would engender the economic growth and that economic growth would reduce poverty. Paradoxically, evidences show that most of these studies went toward a wrong way and principally that there has been a negative correlation between raise of aid flows which was called by many prestigious economist (e.g. Sachs, 2006) and the effective economic growth of most of recipient countries specially in Africa. The graphic bellow illustrates this relation in a period where the flows of aid to Africa have raised steadily (tripling as a percentage of African GDP from 1970s to 1990s), but African growth remains stuck at zero percent per capita (Easterly 2005). Fig. 1 Aid and Growth in Africa (10 years moving average)

Source: Easterly, 2005

Because of the failure on attempting to find evidences that just foreign aid per se would be able to promote economic growth and consequently poverty reduction4
3

Ibid

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the literature on aid effectiveness started to make some progress and take account on the severe problem of reverse causality with the use of variables which included not just macroeconomic factors, but at this new era the political variables. 1.4. Aid and Policy: a new perspective Peter Boone (1996) was one of the first to consider the relation between aid and political environment. He was extremely critical to the effects of foreign aid to political institutions. He arrives even to mention that foreign aid programs were launched long before the existence of a compelling theory, or compelling evidence that proved they could work and massive aid programs that began after the second world war, but only took off in the 1960s, are an unprecedented economic experiment (Boone 1996). But most interesting Boone has stated that aid does not significantly increase investment and growth, nor benefit the poor as measured by improvements in human development indicators, but it does increase the size of government. He finds that the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive. But liberal political regimes and democracies, ceteris paribus, have on average 30% lower infant mortality than the least free regimes. This may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs. An implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs (Boone 1996). Most recently, Burnside and Dollar (2000), have also included the political environment aspect to the analysis of aid effectiveness but differently of Boone, they follow a much more liberal perspective and they do find a relation between growth and aid. The main argument of Burnside and Dollar is that aid accelerates
4

There is another debate concerning the relations of economic growth and poverty reduction and some evidences of a negative relation between these factors. The neoclassical economy believed in a positive relation concerning economic growth and poverty reduction based on the idea of Trickle down. It states that in a first moment, economic growth would concentrate wealth, bus so far this growth achieve a certain level, the wealth would trickle down to the poorest of the society and then reduce inequalities and poverty as well. Some evidences shows that there was no trickle down to most of poor countries and despite some considerable level of growth the level of poverty has even increased. For further information on this debate see Dollar and Kray, (2002); Weisbrot, Naiman and Kim, (2000) and Ravaillon, M, (2005).

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growth in developing countries with sound institutions and policies, but has less or no effect in countries in which institutions and policies are poor (Burnside & Dollar,2000). This result is argued to be quite intuitive: a corrupt, incompetent government is not going to use aid wisely and outside donors are not going to be able to force it to change it habits. This evidence is supportive of the growing trend among aid agencies toward greater selectivity that is, channelling relatively more aid resources to poor countries with reasonably good institutions and policies (Burnside & Dollar, 2000 : 3). It is important to note here that this can be challenging not just for recipients who will be obliged to improve the quality of their institutions, but also to donors, to whom strategic allocation of aid might be reviewed. The graphic bellow illustrates the hypothesis of Burnside and Dollar. Fig.2 Growth, Aid and Policy

Source: Burnside&Dollar, 2000

Effectiveness of Foreign Aid in Zambia

Another finding at the article of these two authors, which will be very important to our case study, is what concerns the impact of aid on institutions and policies. They argue that there is a consensus around the fact that aid, as traditionally practiced has not systematic, beneficial effects on institutions and policies (Burnside and Dollar). This is important when we consider that many donors have, several times even increased the amount of aid to a recipient country that has steadily showed bad political performances, expecting to improve the quality of institutions. This is for example the case of Zambia, which will be discussed further. Coming back to Burnside and Dollar, they argue that in particular, there is a broad agreement that giving a large amount of financial aid to a country with poor economic institutions and policies is not likely to stimulate reform, and in fact it may retard it (Burnside & Dollar 2000 : 4). Two important problems rise of the analysis of Burnside and Dollar. The first one is how to define good institutions. In this sense some researchers question the long list of things that must be done and the casual chain from good governance to development, by exploring the particular histories of developed countries, suggesting that specific conditions of good governance are basic characteristics needed for sustained development secure property rights and contracts, for example -, while other governance factors emerge over time in conjunction with or in consequence of economic growth and poverty reduction (Grindle 2007). Furthermore the World Bank has suffered much criticism by prescribing a model of governance based on Western values of democracy and free market. The second problem is the idea of selectivity. Assuming that the foreign aid will just have a positive impact on countries with a sound policy, countries with bad policies will be excluded of aid, then what to do with their population. The Paris declaration has embodied the principle of selectivity in order to improve the quality of aid and specially to serve as an incentive to countries with poor policies, to pursue the improvement of the institutions5.

To further information, see the document of the Paris Declaration on the web site http://www.oecd.org/document/18/0,2340,en_2649_3236398_35401554_1_1_1_1,00.html

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Following this same reasoning, Van de Walle states that according to many studies the foreign aid to Sub-Saharan Africa has presented a very small effect, being in several cases negative both to growth and poverty reduction. He argues that, because of corruption, the most part of the poor people in these countries has never received any kind of aid (Van de Walle, 1999) Should we then use only policy and institutional quality as measure in determining aid flows? Should countries with poor policy and poor institutional quality receive no aid at all and then all their population would pay the price by the path followed by the government? This would probably be to rash a conclusion. Recent research by Clemens, Radelet, and Bhavnani (2004) takes an entirely different approach. Instead of focusing on the different policy and institutional characteristics of recipient countries, they focus on the characteristics of different types of aid flows. Importantly, they consider only what they term short impact, which includes budget and balance of payment support, infrastructure investments, and aid for productive sector such as agriculture and industry. In contrast to previous studies, they find a strong impact of aid on growth (and thus in poverty reduction, at least to some extend) regardless of institutions and policies In light of such evidence, it is necessary to be cautious and avoid a new faddism or herd behaviour in the relocation of aid flows to a small group of countries that meet the criteria. Timely interventions to support reform efforts and to avert famines and other crises remain a vital function of aid (Clemens, Steven and Rikhil 2004)(Goldin 2007). 1.5 Aid: Is it working or not? The debate Easterly x Sachs The most recent debate on foreign aid is between Jeffrey Sachs and William Easterly. Sachs is optimist about the possibilities of the foreign aid. He consider that the money invested in aid is still just a small value compared to wastes in war, subsides etc. He notes that aid and technology has improved the life of many societies specially regarding health and education. According to him: Life-saving and poverty-reducing measures raise the productivity of the poor so that they can earn and invest their way out of extreme poverty, and these measures do so at an amazingly low cost. To extend these proven 11

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technologies throughout the poorest parts of Africa would require around $75 billion per year from all donors, of which the US share would be around $30 billion per year, or roughly 25 cents per every $100 of US national income. (Sachs 2006). William Easterly is extremely critical to this assumption and the overall effect to aid to Africa. In response to Sachs, he states that: Poverty in Africa is the outcome of much deeper factors such as political elites who seek mainly to protect their own position, dysfunctional institutions like corruption and lack of property rights, and a long history of exploitation and meddling from abroad (the slave trade, colonial depredations, the creation of artificial states, military interventions). It takes breathtaking hubris to assert that this mess can be fixed for the tidy sum of $75 billion. A similar hubris leads to amnesia concerning the many previous generations of technical experts that have ineffectively tried Sachs's "proven strategies" to end African poverty (Easterly, 2007). And continues Poverty never has been ended and never will be ended by foreign experts or foreign aid. Poverty will end as it has ended everywhere else, by homegrown political, economic, and social reformers and entrepreneurs that unleash the power of democracy and free markets (Easterly, 2007)

Easterly view s of aid is substantially skeptic and considers most the destructive effects of aid as well as how aid was, most of times, tied to political and sector strategies, rather being pro-poor oriented. See for example (Easterly, 2007)6

In this study, Easterly focus on the problem of allocation of aid and he shows us that aid has been much more associated to strategic interest (for example, political and economic) rather than propoor oriented. This lead to a problem of allocation and coordination of aid. Many countries see a concentration of aid in a certain sector, whereas the better strategy, according to Easterly should be to diversify aid and find a better coordination among the donors.

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In the same line of scepticism of Easterly, Collier argues that as a general rule, aid tends to retard the growth of the labour-intensive export industries that are a poor countrys most effective engine of growth. And much aid gets diverted into military spending (Collier, 2005)

2. The Main Constraints of Foreign Aid in Sub-Saharan Africa 2.1 What is Wrong with Sub-Saharan Africa? Sub-Saharan Africa is often cited as the paradigmatic example of destructive political effects of foreign aid. There is a set of constraints that lead several authors to state that foreign aid to Africa has been failing. Briefly summarizing, the main evidences are: Existing aid organizations have achieved very little poverty reduction despite the astronomical sums of money they have spent on SSA (Easterly 2006); Many countries in SSA, which have received a large amount of aid have, paradoxically, increased the indicators of poverty in the last years; Larges amounts of aid have made some countries extremely dependent on foreign assistance to supply basic services; Corruption and aid fungibility have been some main problems. In this topic, we will focus in two main problems in order to support the main argument of this paper: The problem of ownership and policy-based conditionalities. Indeed, the option to focus in these problems does not reflect that we will neglect, which I consider some of the root causes of poverty corruption and lack of a strong state as well a broad range of structural problems faced by SSA states since the very beginning of their formation but rather, it reflects my understanding, that because of these root causes, both donors and recipient countries are failing to find a way in which aid will effectively promote growth and specially reach the poorest. By one side, recipients are not able to assure that the development assistance will find a safe place and money will be

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properly used. Then, by the other side, donors will try to assure the maximum of certainty by imposing more and more conditionalities and this will have a negative impact on ownership. We will better discuss this relation on the next topic. 2.2 The problem of ownership x policy-based conditionalities There are many problems faced when two countries or a multilateral organization and a country work together in order to establish an aid arrangement. This happens essentially because donors and recipients have different perceptions and different interest. This is a main problem of development assistance. One could simple ask if both the interest of donors and recipients might simple be fight poverty and raise the standard living of the population. Unfortunately the answer is not. Easterly, 2005 has showed in a very illustrative study, how donors allocation of foreign aid has varied along the time and how it was related to political and economic strategies. But supposing that both interest of donors and recipients is to fight poverty in recipient countries, the problems is not solved. The perceptions on how to implement the most appropriate strategy to reduce poverty can be very different. Donors will always have an advantage of being creditors and this gives then a stronger position to impose what we call conditionalities. The conditionalities have as the main objective to solve the problem of the broken feed back loop7, in other words to provide the most possible environment of certainty where funds of donors will be applied. Considering the financial aid or the aid to the balance of payments made by the World Bank and the IMF in 1980s to most of the Sub-Saharan countries, the set of conditionalities more known as structural adjustment had the main objective of increasing the probability of prompt repayment of dent and sometimes even to ensure that the funds do not support (including grants) do not support policies inconsistency with the values of the creditors. In other words, the creditors/donors typically want the funds to be used productively, and that the recipient government
7

See Severino & Charnot 2007

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is able to collect taxes and the country able to generate the foreign exchange to facilitate timely repayment of any debt assumed (Johnson, 2005). But the hard side of the conditionalities is that, according to critics, conditionality is often used as an attempt to buy policy change with financial aid ignores certain countervailing factors. Most notably, the aid by alleviating fiscal and payments pressures could daunt the incentive for policy change. This aggravates a time inconsistency problem, namely, that once the aid was received unless the government wanted the reform it could reverse it. In addition, when a government does not sustain the reform, it has not been typically punished, for reasons that include the fact that to cut off the recipient country from further assistance would aggravate its payments problem thereby threatening its ability to repay the very aid donors, where relevant (Collier, 2001). For this reason, we note several examples, and here I mention again the case of Zambia, where financial flows persisted even when conditionalities were not filled and the political environment was going even worse. Regardless all the discussion about the effectiveness or not of the conditionalities, a main problem the second main problem that I propose to analyse in this section - raise from the simple existence of this kind of arrangement: the ownership problem. Van de Walle considers that ownership is of the main problems of effectiveness of foreign aid in Africa. According with this author, recipient governments have the ownership of a financial activity of the foreign aid when they are convinced that the aid will enforce their power and their interest (Van de Walle, 1999). To Johnson, 2005 if a country owns a programme, it has the right to insist on making the final decisions without coercion on the contents of a programme. In addition, the country accepts without coercion the obligation to take full responsibility for the outcome of the programme and hence for the welfare consequences to its citizens and for certain external effects on noncitizens. Furthermore, the above right and obligation would be generally acknowledged by all other parties such as creditors, international organizations, and other countries 15

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who have anything to do with the programme (Johnson, 2005). For Ranis, 1995, it seems clear that the lending cum conditionality process works well only when local polities have decided, largely on their own, possibly with outside technical help, to address their reform needs, effect certain policy changes sequentially, and approach the international community for financial help in getting there' (Ranis, 1995 from Dollar and Svenson). 2.3 World Bank Policies and Reform Strategies: Can Conditionalities Promote Good Governance? When we talk about foreign aid by the World Bank and the International Monetary Fund, an important point in terms of conditionalities is the structural adjustment. As already stated, the structural adjustment programs came out of another view of why Africa is poor, and this gained prominence in the early 1980s with the advent of the Washington Consensus. This view says that Africa is poor because its government have chosen bad policies. The bad policies view of Africas poverty led to a different view of the role of aid. In this sense, throughout the imposition of a set of macroeconomic conditionalities, the role of the Western donors should be to induce changes in the political context of the recipient countries. The structural adjustment loans (SALs) of the IMF and the World Bank were the embodiment of this approach. As already argued in a previous session, Western donors and international institutions were not very successful in changing policy (Alesina and Dollar 2002, Burnside and Dollar 2000, Van de Walle 2001, 2005, Easterly 2005). According to Goldin 2007, the adjustment program that came into their own in part in response to the severe macroeconomic imbalances of the 1970s, including these that were the result of oil shock, had own problems. Donors incorrectly believed that conditionalities on loans and grants could substitute for country ownership of reforms. Too often, governments receiving aid were not truly committed to reforms. Moreover, neither donors nor governments focused sufficiently on alleviating poverty in designing adjustment programs. In the late 1970s, and early 1980, the pendulum in leading donor countries swung to the new 16

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policies of Ronald Regan in the United States, Margaret Tachter in The United Kingdom, and Helmut Kohl in the Federal Republic of Germany. This was reflected in the World Bank by a new emphasis on getting the prices right and the articulation of the Washington Consensus, and the aid community focused on macroeconomic reform in developing countries. While it was necessary to achieve macroeconomic stability as a prerequisite for sustainable growth and poverty reduction, both donor and recipient countries underestimated the importance of governance, of institutional reforms, and social investments as a complement to macroeconomic and trade reforms. Prescriptions for reform were too often formulaic, ignoring the central need for country specificity in the design, sequencing and implementation of reforms (Goldin 2007). This author thus considers that, as a result, weak of governance and institutions reduced the amount of productivity growth and poverty reduction that could result from the macroeconomic reforms and many of these factors were present in Africa, contributing to the impoverishment of this continent. In this sense, Goldin considers that t here are many causes to slow development in Africa, including poor domestic policies and institutions and weak commitment to reform, but too often aid did little to improve the situation and in some cases even worsened it (Goldin 2007). An illustration of the impoverishment of Sub-Saharan Africa is well showed in a study by Easterly, 2005. He picked out the African countries that were in the top 20 worlds wide in number of structural adjustment loans received from the World Bank and IMF. Most African countries that received intensive treatment from structural adjustment have negative or zero growth and some have high inflation. On balance, the outcomes associated with frequent structural adjustment lending are poor negative growth or high inflation, or both. Of course, there is a selection problem in that countries that are already in trouble were the ones that were chosen to receive these loans. However it is hard to believe in a positive effect of structural adjustment lending despite the selection problem, for three reasons: First, things were so bad in so many recipient of structural adjustments that it stretches belief that it had a strong positive effect. Second, since structural adjustment loans were repeated year after year, one wonders why the patient did 17

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not improve after repeated doses of the medicine. Finally, formal statistical methods to control for possible reverse causality from crises to treatment still finds that structural adjustment lending had a zero or negative effect on economic growth (Easterly, 2005). Przeworski and Veeland, using a bivariate, dynamic version of the Heckman selection model have a very interesting study on this issue. They find that the effects of the IMF programs on growth are negative, and even selection is taken into account, IMF programs still appear to reduce growth. Thus, they show that countries could have a better performance on economic growth without the IMF loans. (Przeworski & Veeland, 2000) Another piece of evidence is that even the considered success stories by the report aid and reform in Africa, namely Ghana and Uganda could not play back zero interest Structural Adjustment Loans, and the World Bank and IMF had to forgive the debts through the Heavily Indebt Poor Countries. Collier has argued that the failure of the conditionalities imposed by the World Bank reflected two fundamental weaknesses. First, governments learned to game the system by reneging on their promises. Aid was committed on the basis of a promise, yet the limited continuity in Bank decision-taking and the strong incentives to disburse made enforcement through future aid commitments incredible. In the event, some governments were able to sell the same promise of reform to the Bank several times. This weakness of conditionality is a straightforward instance of a class of problem known in economics as time inconsistency. The second weakness was that the coercive nature of the Bank is promotion of policy reform deepened government resistance to policy change. This is also a straightforward instance of a class of problem known in the psychology literature as reactance (Collier, 2001). In this regard, Hirshman has talked about the perversity thesis. It consists on the belief that an attempt to push the society in one direction will move it the opposite way. According to Hirshmman, 1991 the perversity thesis is a standard justification for being against government programmes.

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But maybe, the main mistake made by donors specially in the 80s is that in general they have not discriminated effectively among different countries and different phases of the reform process and they have tended to provide the same package of assistance everywhere and at all times. In this sense, failures in implementation result from lack of political will of the authorities or simply from inadequate capacity (Johnson, 2005).

3. Case Study Country Aid Effectiveness in Zambia 3.1 Problem Overview Zambia is a very challenging country to study the effectiveness of foreign aid. As argued in a report of the World Bank, in Zambia more than in most other subsaharian african countries, financial aid from the international donor community over the last two decades has been tied to the implementation of economic policy reform (Van de Walle and Rakner 2001 : 535). But the conditinalities combined with a complicated relationship between donors and the government of Zambia have damaged the effectiveness of a big ammount of money which was one of the major flux of aid in Africa for many years. Thus, the relationship with the government of Zambia with these institutions as well as to the bilateral donors is something very important to our analysis especially when we consider the problem of lack of ownership. Since the independency from England, in 1964, this country has been extremely dependent on foreign aid, while at the same time an increasing number of Zambians have seen their social and economic conditions deteriorated. As we will see further illustrated on social and economic indicators, there is evidences that over the last 35 years the indicators of poverty have increased in a sense that puts this country as one of the poorest in sub-Saharan Africa. For the most of the 1990s a staggering 65-70 % of the population has been living on or below the poverty line. Given the political and economic role of foreign aid in the country it is highly relevant to ask how well the aid from the most important donors reflects the pressing issue of poverty reduction (Carlsson, et al. 2000 : vi) 19

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There is a wide range of methodological regressions to evaluate the impact of the financial aid in a country and good methodology will consider a broad set of macroeconomic and structural factors. My purpose in this paper is more limited. I will adopt an analytical framework and my main objective in this part is to show how political instability in Zambia has affected the impact of foreign aid. The analytical framework is presented as follows: Fig.3 - Analytic Scheme

Elabored by Appolinario, U.

Political instability will be an independent variable which will have adverse effects both to donors and investors confidence and consequently to the implementation of reforms. This leads to the failure of the role of foreign aid. The evidences adopted to verify this argument will be (E1) Economic performance, (E2) Evolution of social indicators, (E3) Aid dependency. The adoption of these indicators lays on the fact that the mains purpose of the foreign aid is argued to be the rise of standard livings of the population of recipient country trough the economic growth. Aid dependency for the other side can be a negative signal that the country is not responding productively to the amount of money lent. In order to introduce the problematic of the political environment I will present in the next sub sessions a brief analysis of the evolution of the relations between donors and government of Zambia and how aid was sensible to the issue of governance and reform.

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3.2 Aid and Policy in Zambia To study policy of the foreign aid to Zambia, we can divide the history of this country in two main periods (1) From independence in 1964 to the adoption of a multiparty system in 1991 the period know as the Kaunda years; and (2) from 1991 to nowadays, dominated by the MMD, or the Chiluba years. As we will see in the following session, the flows of external aid and the behavior of donors were directly conditioned to the performance of reforms and to the political willingness to accept donors conditionalities. 3.3 The Kaunda Years Right after independency, Zambia experienced a period of growth and stability, with the economy based specially on copper sector. The mining companies were traditionally the most important employers in the economy, and copper itself was the biggest generator of foreign exchange. It thus provided the basis for the import-substituting industrialization efforts that the government had embarked on in the 1960s. The Zambian Government considered the sector so important for its development that the mines were nationalized by the beginning of the 1970s (Bigsten and Kayizzi-Mugerwa 2000). However a dramatic slowdown in the economy and the end of the successful years started with the global recession of the 1970s. As a first impact, the copper incomes fell dramatically. The government was initially not willing to adjust, but borrowed large amounts of money to maintain the copper mines and the public sector, in the process building up a large debt. The first adjustment programme, with IMF backing, was introduced in 1978. This Action Programme led to a certain measure of stabilization, but the government failed to maintain reform momentum. Another structural adjustment programme was embarked on in 1983, with the major goal of correcting price distortions. Included was the decontrol of interest rates, deregulation of prices, and general reduction of tariffs. The government also sought to reform the parastatals, as well as the taxation system. A notable feature of the programme was its emphasis on raising agricultural production, which would be achieved by agricultural producer-price increases. 21

Effectiveness of Foreign Aid in Zambia

However, as in earlier attempts, the success of the new programmes was conditioned on support for the policies by the elite and urban dwellers (Bigsten and Kayizzi-Mugerwa 2000). The reforms were highly unpopular and moreover also tended to undermine the position of the ruling partys main political constituencies (see Bates and Collier, 1993). This leads to a context of political instability in the country. President Kaunda replaced key members of his economic policy team in April 1986. The shift culminated in May 1987 in the abandonment of the IMF-supported adjustment programme altogether, putting an end to the most sustained reform attempt during the Kaunda era (Bigsten and Kayizzi-Mugerwa 2000). Curiously, despite the political instability in the country in this period, the foreign aid has increased. The graphic bellow illustrates the relation between aid and policy in Kaunda era. Fig.4 Aid and policy performance in SSA

Source: World Bank, 1998 According to the World Bank, there are a number of reasons why donors have given so much assistance to poor countries with weak policies and Zambia

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Effectiveness of Foreign Aid in Zambia

illustrates it. Donors hope that aid will induce policy reform, but unfortunately, money has proved to be quite ineffective in generating reform in this country. Foreign aid increased steadily reaching 11 percent of real GDP in the early 1990s. However, policy got worse throughout this period. Despite a series of structural adjustment loans from the World Bank and the IMF, there was no substantial improvement in policy before a new government came to power in the early 1990s (Pritchett and Dollar 1998). It shows us that, instead of improving political institutions, in Kaunda era, aid had a negative effect and might have retarded the reforms instead of promoting them. 3.4 The Reform Period under MMD 1991 The misleading of a promissory decade The opposition won the elections in 1991 on a liberal platform of commitment to reforms and the IMF. To the donors, the introduction of a multiparty system was a promise of a new era based on reforms and for this reason they increased the support to Zambia, with aid, at close to US$1.5 billion, reaching its all time peak, in 1992 (Bigsten and Kayizzi-Mugerwa 2000). Two main programs were adopted in a attempting to show that the new government was committed to economic reforms. The first one was the Economic Program Reform (EPR) with the goal of arresting the economy decline, and the second, the Rights Accumulation Programme (RAP) supported by the IMF. At the end of 1995, the government had made enough progress under RAP to resume borrowing from the IMF and this was the first time that Zambia had actually completed an agreement with the Fund (Bigsten and Kayizzi-Mugerwa 2000). Another initiative toward the economic reforms was the establishment of the Zambian Privatization Agency in 1992 and the Public Sector reform launched in 1992. As expected by the donors, the new government introduced some measures which included rapid liberalization of external trade and payments system, and a movement towards a market-determined exchange rate; depreciation of Kwacha the domestic currency; removal of exchange controls on current transactions and 23

Effectiveness of Foreign Aid in Zambia

removal of all licensing and quantitative restrictions on imports and exports were removed, and the tariff structure was rationalized. By 1994, Zambia had one of the most liberal foreign exchange regimes in SSA and the International cooperation institutions have considered Zambia a case of success. Considering all the reforms implemented in this period, I will argue here that the core of the failure of the external aid in Zambia is to be discussed specially on MMD government. Not because the relations with the donors were more turbulent in this period than the period of Kaunda, but rather because, different of Kaunda mandate, at the beginning, this party was strong committed to reforms requested by the donors and indeed, none of the reform measures implemented have been reverser and no aid agreements with the IFIs have been canceled (Van de Walle and Rakner 2001). Even one of the most sensible issues, the privatization of the mining sector was put into practice starting on 1997. So, how can we explain that the MMD years achieved so little in terms of growth and that the poverty indicators increased even more rapidly in this period? Was that an signal that the structural adjustment prescription by the World Bank and the IMF were going toward a wrong direction. According to Van de Walle and Rakner 2001, a number of explanations for the limited supply response have been offered ranging from claims that the governments commitment to reform has waned, to sequencing errors, inverstor security, exogenous factors and Zambias landlocked status. They argue that most of these explanations point to one commonality : The precarious absence of a genuine strategy for economic development set forth by the MMD government. Long term development goals have also largely been absent from the donors strategy (Van de Walle and Rakner 2001). In this sense the failure of the foreign aid can be felt both in the economic and in the political field. Bigsten argues that it also seems quite likely that the slow reform of the mining sector that always was polically difficult, did cost a lot in terms of lost momentum and financially in termis of subsiddies throughtl the 1990s and this foot-dragging also sent the wrong signal to potential investors about the governments reform commitment. 24

Effectiveness of Foreign Aid in Zambia

However these measures were not sufficient to stabilize the economy and soon the population was unsatisfied with the government. Furthermore, although the MMD has taken a set of economic reforms, the same cannot be said about the political institutions. Other aspects of reform programm, most notably institutional reforms, have lagged behind (Van de Walle and Rakner 2001) and this fact has caused many constrainst in the relation government and bilateral donors. In fact, the government maintained the autocratic legislation of Kaunda still intact, and with this legislation, the new government soon came to abuse its power. One of the first episodes that illustrate this fact took place just one year after the elections. Fear of oppositions by the side of Kaunda, led to the declaration of a state of emergency in 1993. The MMD then changed the constitution to bar Kaunda from running in future elections in 1996 and the elections in this year was indeed considered flawed by many observers (Van de Walle and Rakner 2001). The conduct of the elections proved that the Chiluba government was willing to compromise the rule of law, was intolerant of criticism and willing to exploit its majority position and control of government resources to undermine its opponents (Van de Walle and Rakner 2001). This met extensive opposition from the domestic press, civil society, opposition parties and donors. (Bigsten and KayizziMugerwa 2000). At this same time, it has been also raised concerns about issues of corruption and drug trafficking within high political offices (Van de Walle and Rakner 2001). As a consequence of these political crisis, the majority of Zambias bilateral donors withheld balance-of-payment support from 1996-1998. In June 1996, US, Norway, Sweden, the Netherlands, Germany and Japan cut off balance-ofpayments support to protest the exclusion of Kenneth Kaunda from the presidential elections. At the Consultative group meeting in July, US 150 million was pledged in balance-of-payment support, conditional on governance reform. Again in May, 1998 Consultative Group Meeting Zambias donors pledged US 530 million in balance-of-payment support but the disbursement was made contingent on the sale of the cooper mines and further improvements of the governance record. Most bilateral support was again held back. However, it must 25

Effectiveness of Foreign Aid in Zambia

be noted that the financial cuts have in most affected programme aid, or balance of payment support. The governance situation in Zambia has nit improved significantly in recent years. Furthermore, the privatization of ZCCM has not been finalized. (Van de Walle and Rakner 2001) It is clear that the post-election period (1996), the international community appears to have lost faith in the effectiveness of the conditionalities instruments. The Zambian government on its side has adopted a rather skeptical attitude towards the donors, increasingly viewing the process of policy reform as externally imposed and charging the donors of moving goals post. Thus, within a few years, the international donor communitys view on Zambia appears to have changed from a position as a most promising reformer to a most reluctant reformer (Van de Walle and Rakner 2001). It seems clear that the turbulent relation between donors and the government of Zambia was related much more to the unwillingness of the government to reform the political institutions and this fact had several consequences to investors confidence and consequently to the economy of Zambia. By the donors part, since the government of Zambia has given many signals that they were not willing to reform political instituitons, this leads to a crisis of confidence and despite the implementation of the structural adjustment, many donors have reduced and even interrupted the flows of aid for several times in this period. The curious thing is that, despite all those indicators, it cannot be argued that the direction of the governments overall econcomic policies has been altered, as so often was the case during the Kaunda years. The Zambian government has, in principle remained commited to stabilization and the economic liberalization process throught its first electoral period and also into the second period. What remains unclear is : The pressure exercised by donors toward governance and democratic issues really reflect their committment with these principles, or rather the fear that they had of the constraints that the political environment could cause to the plans of privatization and economic liberalization ? This is still a ongoing question present in all the debate on foreign aid and that certainly will challenge the especialist in this field toward an improvement of this tool to achieve a real 26

Effectiveness of Foreign Aid in Zambia

development in recipient countries8. 3.5 Analytical Framework : The outcomes of a decade of failed reform in Zambia 3.5.1 Evolution of Social Indicators The poverty situation of Zambian population started to increase after the 80s with the world recession and the substantial fall on copper prices, the most important resource of exportation to this country. The situation deteriorated to such an extent that, in 1985, the World Bank re-classified Zambia from a low income to a lowincome country. By the early 1990s, Zambia had reached a level where the UN General Assembly included Zambia on the list of least developed countries. Thus, during the last 35 years, Zambia has experienced the worst economic decline in Sub-Saharan Africa. In this sense, Carlsson, 2000 argues that to make matters worse, it is difficult to see a rapid change for the better (Carlsson, et al. 2000). According to this author, the high levels of poverty in Zambia have been characterized as a social crisis (Carlsson, et al. 2000). But not just the failure of the economic policies and the impossibility of this country to achieve political instability have been responsible to this situation. The dramatic effects of the AIDS epidemic, increasing rates of population growth and consecutive droughts have all played their role in shaping this crisis (Carlsson, et al. 2000). The table below shows the evolution of some social indicators. The general tendency is degradation in all social indicators. For example, life expectancy has declined from 51 years to 48 and real income per capita has been reduced by almost half in this period.

There is an extensive debate on how to improve the effectiveness of foreign aid and it has a strong linkage to donors intentions. For more information on this debate, see www.ocde.org

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Effectiveness of Foreign Aid in Zambia

Fig.5 Zambia: Evolution of Social Indicators from 1985 to 1995

Source: Bonnick 1997: 56 cited in (Van de Walle and Rakner 2001) The poverty indicators are even more warning. In 2001, about 68% of Zambians live below the recognized national poverty line, with rural poverty rates standing at about 78% and urban rates of 53%9. The IDH of Zambia is one of the lowest in the world, 0.453 and its classification and in 2006 the classification of this country in the ranking was 165.10 3.5.2 Economic Growth: The Failure of Decade Lost

After almost a decade of uninterrupted policy reforms, the record in terms of economic growth, employment creation, investiments and poverty reduction remains extremely weak. In terms of macro economic growth indicators, the Zambian economy has shrunk and is now smaller than it was in 1991. With a 25 per cent increase in population over the last decade, per capita income has dropped by 4 per cent annually in the last decade, thus extending the long period of economic decline that begun in the 1970s. Mineral production has declined throughout the decade formal employment has been reduced in all sectors but public admnistration and social indicators reveal that poverty and infant mortality
9

Development Indicators Unit, Statistics Division, United Nations. "Population below national poverty line, total, percentage".http://mdgs.un.org/unsd/mdg/SeriesDetail.aspx?srid=581&crid=89 10 Fromhttp://hdr.undp.org/en/statistics/ on June, 08th, 2009

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Effectiveness of Foreign Aid in Zambia

have increased since the 1980s (Van de Walle and Rakner 2001). The graph below shows the gap between the economic growth that Zambia was supposed to have achieve with the large amount of foreing aid according to the Harrod-Domar Model and the real growth achieved in this period. Fig.6 The Gap between Harrod-Domar model and the reality in Zambia

Source: Easterly, 1997

Even in the context of Sub-Saharan Africa performance, Zambias ecomomic decline has been extreme. Real GDP per capita is stimated to have more than halved since 1970. The need to restructure and diversify the economy was an early concern in Zambia. Andersson, 2000 argues that Since independence in 1964, a number of attempts have been made to reduce the dependence on copper. First, import substitution was vigorously supported. Today, the oversized industries from import-substitution era produce way below installed capacities and are now seen as hindrances to the development of a viable manufacturing sector based on small-scale firms and using a technology in keeping with Zambias meagre resources (Ardersson, 2000).

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Effectiveness of Foreign Aid in Zambia

The following indicators below show the declining rates of growth that the economy of Zambia has experienced since 80s. Fig. 7 Macroeconomic Data for Zambia Year 1964 1979 1985 1990 1992 1994 1998 GDP Growth 12,9 -3 1.6 -0.5 -1.7 -8.6 -2.0 Inflation 3.1 9.7 37.3 117.5 197.4 52.3 24.5 Budget defict as share of GDP 5.7 -9.1 -15.2 -8.3 -2.5 -6.8 -4.3

Source: IMF Financial Statistics, Central Statistical Office and Bank of Zambia Cited in Andersson, 2000.p.12. Adaped by Appolinario, U.

3.5.3

Aid Dependency

Over the years Zambia has developed into one of the most aid dependesnt countries in Sub-Saharan Africa. In 1992, Zambia received an aid per capita of USD 125; this was about 3,2 times as much as SSA as a whole (World Bank 1999) (Carlsson, et al. 2000) Fig. 8 The aid dependency of Zambia, 1992 and 1997

Source: (Carlsson, et al. 2000)

When interpreting aid dependency ratios the World Bank had the following to say (World Bank, 1999)

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Effectiveness of Foreign Aid in Zambia

Care must be taken in drawing policy conclusions. For foreign policy reasons some countries have traditionally received large amounts of assistance. Thus, aid dependency ratios may reveal as much about the interest of donors as they do about the need of recipients. In this sense, Carlsson argues that the volume and composition of external assistance to Zambia has been conditioned by the country willingness to reform and by the degree of economic adversity (Carlsson, et al. 2000). It is important to understand that the reduction showed in the table does not reflect that the productive activities in the country has increased, but rather that the donors have withdrawn their support to this country mainly because the political instability of the final of 90s. The external debt burden is also another indicator of aid dependency. Statistics shows that, the Zambias debt stock remains unsustainable. The debt/export ratio has gone from an impossible 515% in 1995 to an even more impossible level of 741% in 1998. Just in 2005, Zambia attained HIPC status and in 2006 MDRI status, which resulted in debt reduction from $7.2bn to $0.5bn (World Bank, 2008). Fig. 9 The External Debt of Zambia, 19951998

Source: Ministry of Finance and Economic Development. Lusaka. Cited in (Carlsson, et al. 2000)p.6

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Effectiveness of Foreign Aid in Zambia

What has gone wrong? And what can be done? It seems quite evident that it was the lack of a sound political environment that has caused the failure of these two decades of foreign aid in Zambia. Nevertheless, it cannot be assumed that it is of entire responsibility of the government. Indeed the instable political scenario of 90s in Zambia has adversely affected the confidence of donors and in this sense not even the economic reforms were able to show the compensate it. However, a key factor that must be considered is the absence of commitment by the donors side to a sound national development project. In this sense, Zambia has become extremely dependent on foreign aid to supply basic services to the population and when the flows of aid were reduced or interrupted, this was strongly harmful to the most of the population. The high debt burden has also affect adversely the national accounts of this country for many years and because of the political instability of 90s, Zambia has achieved the status to have the debts cancel just in 2005. In sum, Zambia is a clear case of essential panorama to which foreign aid created an vicious circle in which institutional weakness on the recipient side encourage donors practices that undermined national ownership of aid. But, if aid can just be effective in stable environments, what to do with poor countries with poor environments as the case of Zambia, for example? According to Moyo, an economist from Zambia, aid apparatus has not only come to trap poor and indebted Zambia but in her view is the root cause of poverty. The central argument of her book Dead Aid, is that aid is the fundamental cause of poverty and therefore eliminating aid is critical to spur growth in ailing African states. She uses the common statement that aid distorts incentives among policy makers and society at large (Moyo, 2009). The solution proposed by Moyo is quite radical: cut definitely aid and adopt a strategy of access to international markets, supported by microfinance, trade, FDI and remittances (Moyo, 2009). According to Moyo, the access of African countries to the international market will operate also as a toll of selectivity and in this sense can serve as an incentive to improvements in governance. 32

Effectiveness of Foreign Aid in Zambia

4. Conclusion In this study I have focus on the main constraints of foreign aid and the costs that entire populations of African countries has paid and will continue to pay, instead of really taking benefits of the foreign workers. It is important to highlight that in the last years the main concerns about the adverse effects of foreign aid were part of a debate that has primarily focused the problems of the recipient side, specially the problems of governance in recipient countries. Today, the debate starts to address also the problems of coordination between donors and this recognition of the responsibility of donors has showed a new tendency to this kind of assistance. The Paris Principles and the creation of the Poverty Reduction Strategic Papers, have at the same time given more responsibility to donors and more ownership to recipients. It seems to be contradictory at a first glance, but it is not. Actually the responsibility of donors is more concerned with the principles of the foreign aid and the main purpose of development and poverty reduction. At the same time, the recipient governments have the role of decide the national priorities. If this fact will represent a new paradigm to the foreign aid is still an ongoing question, but the recognition that donors were also responsible for many years of failure of this tool to development, is maybe a considerable advantage. The principle of selectivity raised by the Paris Declaration can be a effective tool to encourage states to adopt better policies, but for the other side it can also neglect very poor populations at the measure that states with poor environment policies will not receive aid. A solution to these populations can be an increase of project and humanitarian assistance. The problem is that the effectiveness of this kind of aid can be very limited in the long term considering most of cases of political instability, there will always be a wide range of factors operating in the contrary side and neutralize or even damage the effects of aid. In sum, much still remains to be done both to donors and recipient countries.

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5. Bibliography Agrawal, Nisha AHMED, Zafar MERDED, Michael and NORDL, Roger. Structural Adjustment, Economic Performance and Aid Dependency in Tanzania . Working Paper Series - Country operations, Eastern Africa Department, World Bank 1993, 1-28. Alesina, Alberto and David Dollar. "Who Gives Foreign Aid To Whom And Why?," Journal of Economic Growth, 2000, v5(1,Mar), 33-63 Andersson, Per-Ake, Hkan Persson, Arne Bigsten, 2000, Foreign Aid, Debt and Growth in Zambia. Reserch report no. 112. Afrikainstitutet, Motala, Sweden Bigsten, Arne, and Steve Kayizzi-Mugerwa. The Political Economy of Policy Failure in Zambia. Working Papers in Economics no 23, Department of Economics, Gteborg: Gteborg University, 2000, 1-18. Boone, Peter. "Politics and the Effectiveness of Foreign Aid." European Economic Review 40 (1996): 289-329. Burnside, Craig and Dollar, David. "Aid, Policies and Growth." American Economic Review 90 (2000): 847-68. Carlsson, Jerker, Patrick Chibbamullilo, Orjuela, and Saasa Oliver. Poverty and European Aid in Zambia A study of the Poverty Orientation of European Aid to Zambia. Working Paper 138, Overseas Development Institute, Sweden: The Nordic Africa Institute Uppsala, 2000, 71. Chenery, H and A.M Strout. "Foreign Assistance and Economic Development." The American Economic Review 56 (1996): 679-731. Clemens, Michael A., Radelet Steven, and Bhavnani Rikhil. "Counting chickens when they hatch: The short-term effect of aid on growth." Center for Global Development Working Paper Number 44 (July 2004): 58. 34

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Collier, P., 2005. Is Aid Oil? An analysis of whether Africa can absorb more aid. Centre for the Study of African Economies, Department of Economics,Oxford University. Collier, P. and Bates, R., 1995 The Politics and Economics of Policy Reform in Zambia, Journal of African Economies, Volume 4, Number 1, 115-143 Easterly, William. "Are Aid Agencies Improving?" Global and Economic Development Working Paper n.9 (Brookings Institutions), 2007: 1-46. Easterly, W., 2006, The white man's burden : why the West's efforts to aid the rest have done so much ill and so little good. New York : The Penguin Pr. Easterly, William. "Can Foreign Aid Save Africa." Clemens Lecture Series (Saint John's University) 17 (December 2005): 1-28. Easterly, William The Ghost of Financing Gap How the Harrod-Domar Policy Paper L807, 1997 Goldin, Ian and Reinert, Kenneth. Globalization for Development. Washington: World Bank and Palgrave Macmillan, 2007. Grindle, M. S. (2007). "Good enough governance revisited." Development Policy Review 25, no. 5 (September 2007): 553-574. Hirschman, Albert, 1991. The Rhetoric of Reaction: Perversity, Futility, Jeopardy. Cambridge, MA: The Belknap Press of Harvard University Press. Johnson, Omotunde E.G. 2005. Country Ownership of Reform Programmes and the Implications for Conditionality. G-24 Discussion Paper Series No. 35, January - United Nations Conference to Trade and Development

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Moyo, Dambisa, 2009. Dead aid : why aid is not working and how there is a better way for Africa / New York : Farrar, Straus and Giroux. Pritchett, Lant, and David Dollar. Assessing Aid What Works, What Doesn't, and Why. Evaluation Report, World Bank, New York, N.Y 10016: OXFORD UNIVERSITYP RESS, 1998, 1-160. Radelet, Steven, 2004 Aid Effectiveness and the Millennium Development Goals Center for Global Development Working Paper No. 39. Rostow, W. W. "The stages of Economic Growth: A non-comunist manifesto." 1960. Saasa, Oliver S., 2002, Aid and poverty reduction in Zambia : mission unaccomplished. Uppsala : The Nordic Africa Institute. Sachs, Jeffrey. "How Aid Can Work ." The New York Review of Books 53, no. 20 (December 2006): 1-3. Severino, Jean-Michel, 2007 LAide Publique au Dveloppement. Repres series, Editions La Dcouverte, Paris. Van de Walle, Nicolas, and Lise Rakner. "Zambia." In Aid and Reform in Africa, by Devaraja Shantayanan, David R Dollar and Holmgren Trogny, 535-623. Washington, DC: The World Bank, 2001. Van de Walle, Nicolas and Johnston Timothy A.1999 Repenser l'aide l'Afrique / et trad. de l'anglais par Paulette Graud Paris : Ed. Karthala. Vreeland, James Raymond and Przeworski Adam, 2000 The effect of IMF programs on economic growth Journal of Development Economics Vol. 62 , 385 421. New York University.

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