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April 24, 2009
Development Policy Analysis no. 9

The False Promise of Gleneagles: Misguided Priorities at the Heart of the New Push for African Development

by Marian L. Tupy

Marian L. Tupy is a policy analyst at the Cato Institute's Center for Global Liberty and Prosperity.

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In response to persisting poverty in Africa, representatives from the world's eight leading industrialized nations — Germany, Canada, the United States, France, Italy, Japan, the United Kingdom, and Russia — met in Gleneagles, Scotland, in 2005 and agreed on a three-pronged approach to help Africa. They would increase foreign aid to the continent, reduce Africa's debt, and open their markets to African exports. Unfortunately, aid has harmed rather than helped Africa. It has failed to stimulate growth or reform, and encouraged waste and corruption. For example, aid has financed 40 percent of military spending in Africa. Similarly, debt relief has failed to prevent African countries from falling into debt again.

Trade liberalization has the greatest potential to help Africa emerge from poverty. Yet that is where the least amount of progress has been made. Negotiations on trade liberalization have ground to a halt, and the threat of protectionism looms large as the current global economic slowdown worsens.

The Gleneagles Summit, for all its good intentions, gave rise to unrealistic expectations. The heavy emphasis on aid and debt relief made Western actions appear to be chiefly responsible for poverty alleviation in Africa. In reality, the main obstacles to economic growth in Africa rest with Africa's policies and institutions, such as onerous business regulations and weak protection of property rights.

Africa remains the poorest and least economically free region on earth. The West should do all it can to help Africa integrate with the rest of the world. It should eliminate remaining restrictions on African exports and end Western farm subsidies. Africans, however, will have to make most of the changes needed to tackle African poverty.

Full text of Development Policy Analysis no. 9

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