There is now definitely a welcome fashion for short, polemical and accessible books. The Aid Trap: Hard Truths About Ending Poverty launches a new series from Columbia University Press. Its authors are Glenn Hubbard, formerly head of the Council of Economic Advisers for George W Bush, and Columbia Business School's William Duggan. This authorship makes the conclusions unsurprising but it is nevertheless a spritely read and makes a good addition to the expanding literature on the failure of the prevailing model of aid.

The headline around which the book is written is the need for a Marshall Plan for developng countries, the distinctive feature of that transfer of funds from the US to postwar Europe being that the money went to business rather than governments. They write of the Marshall Plan:

It was less a sweeping program of foreign aid to governments and
agencies than a large-scale effort to restore the power of business as
a growth engine. A true Marshall Plan for Africa could ignite growth
and reduce poverty, but only through a set of institutions that are
different from those the current aid system is currently using.

I've read by now a ton of books criticizing the aid industry. What new or reinvigorated ideas did I get from this one?

– that economics in the post-war years was so blind to the effect of institutions and the organization of the economy that development and growth economics were applied to socialist and market economies as if there were no difference between them;
– that science and technology don't lead to growth – that depends on the business context in which discoveries are made;
– that NGOs and developent agencies are slaves to 'project' mentality – any need calls for a new project even if there's a more effective alternative provided by business – some good examples here from the famous or notorious Millennium Development Villages;
– that agri-processing is a key step to industrialization for poor rural economies but has been made impossible by farm trade subsidies by the US, EU and Japan (especially the diabolical EU arrangements)

I also liked this quotation from a World Bank assessment in August 2008 that its aid had not reduced poverty in Sub-Saharan Africa: “We must redouble our efforts.” If at first it doesn't work, try and try again?

The authors recommend well-wishers to put their money into enterprise in developing countries rather than aid organisations. (They namecheck the excellent Business Action for Africa.) And they urge that official aid should be restructured – although these recommendations are not as new as they seem. In effect, they urge that official aid is made conditional on pro-business reforms, and that conditionality is made real by phasing out aid for those countries which won't accept or deliver on the conditions. Others including Dambisa Moyo have offered the same advice.

I had a couple of quibbles about the book. The authors use the term 'national socialism' to describe the policy approach of many developing economies, drawing a direct parallel with Hitler's Germany. Even if this is accurate in terms of the narrow comparison between the organization of the economy in 1930s Germany and a developing country now, the phrase jarred with me every time I read it.

The second is the price, a steep $22.95/£15.95 for 180 pages. As I've noted before, this format is highly appealing but my guess is that demand is much more price elastic than this kind of price point implies. Other publishers also charge a lot for these small books, but I for one wouldn't pay full price but might well buy them on impulse at a much lower price point, for a journey or a quiet evening.