Date of this Version
Cornhusker Economics (June 19, 2013)
About $1 trillion in foreign aid has been lavished on Sub- Saharan Africa (SSA) since 1960, to little avail, Dambissa Moyo (2010), a Zambian economist, has argued. Annual per capita income growth has averaged less than 0.2 percent since 1976; per capita income adjusted for inflation is almost identical to the level reached in the late 1970s; and almost half the people in the region are living in extreme poverty (less than $1.25 per day in terms of 2005 purchasing power), a figure that has changed very little over the past 30 years (authors’ calculations using World Bank data). Moyo and others have suggested that greater access for African exports to markets in high-income countries offers a better avenue for growth and development than foreign aid. In 2000, the United States government adopted the African Growth and Opportunity Act (AGOA), which aims to increase trade and investment between the United States and eligible SSA countries by reducing or eliminating tariffs applied to African goods, promoting economic development and reform and supporting increased access and investment opportunities. Of the 48 SSA countries, 41 are eligible for AGOA trade preferences. The U. S. and other foreign aid donors continue to provide foreign aid (about $126 billion in 2012, according to the Organization for Economic Cooperation and Development, OECD). But AGOA, a similar program of the European Union known as “Everything but Arms,” and recent initiatives by OECD countries to provide support for the development of infrastructure and the legal framework related to trade (“Aid for Trade”), suggest that a shift in the development strategies of governments in highincome countries may be underway (Moyo, OECD).