Nice piece in the FT by Martin Wolf, "How to help Africa escape poverty trap".

In the aftermath of the tsunami, which has brought the world's attention to the orphans and those whose lives have been virtually destroyed, Wolf reminds us that Africa faces this scale of problems in the ordinary course. He lays out the dilemma of Africa falling further and further behind the rest of the world.

A generation ago, anybody concerned with the challenge of destitution and disease would have focused on Asia. Many outsiders believed obstacles to progress were insuperable. They were wrong. Asia, which contains over half the world's population, has been outstandingly successful. The continent that has failed is sub-Saharan Africa. It is unique in suffering declining average incomes per head, falling life expectancy and exploding poverty.

Wolf reviews the arguments recently presented in Sachs et al's recent paper advocating a two-decade push of foreign aid to Africa. [ Ending Africa's Poverty Trap, Brookings Papers on Economic Activity, 2004, vol.1 ] Sachs et al identify five structural deficits that form the "poverty trap."

Africa's very high transport costs and small market size; its low-productivity agriculture; an exceptionally high disease burden; a long history of malign external interventions; and very slow diffusion of technology from abroad. Given all these constraints, not to mention the fastest population growth in the world, a gross national savings rate of about 11 per cent does not begin to be enough. Rapid resource depletion may even make net investment close to zero. Africa, in short, is stuck.

What is needed to exit the trap, it is argued, is a "big push" that would last some two decades. The push would come in seven areas: raising rural productivity; tackling the disease burden; making primary education universal and expanding secondary education; financing urban development; mobilising science and technology; gender equality; and regional integration.

Wolf reviews and challenges some of the arguments and doesn't find all thoroughly persuasive. Some of the five handicaps identified by Sachs et al certainly apply with more force to some countries than others, and not at all in some cases. Yet taken as a whole, the confluence of factors is a negative if not lethal mix that is proving extremely difficult to overcome, even by countries that are taking their reform agendas very seriously. It should also be noted that none of these countries can be seen in isolation -- progress made in one can be significantly undermined by lack of progress or negative factors in neighbors, whether famine, civil disorder, disease, or simply lack of commercial activity and connectedness due to poor roads and infrastructure and political actions that discourage private investment.

Wolf seems to conclude that the burden or argument should be on those who believe the rest of the world should limit its technical, financial and political support to Africa or the grounds it is either distorting of positive incentives or is likely to be poured down the proverbial rathole. Although he poses the question as if it were presented to the proponents of increased assistance.

The big question for advocates of additional aid is not whether the rich can afford it, but whether the poor can use it. There are at least two big dangers: the first is that aid will crowd out the exports on which longer-term growth depends; the second is that high levels of aid will encourage corruption, bad policy and waste. Yet the option of doing nothing is worse. Greater aid does carry risks. But its absence brings dreadful certainties. Let us manage the risks, not live with the certainties.