Compare and contrast the most important points to development that William Easterly, Jeffrey Sachs, and Susan George & Fabrizio Sabelli Give in their books
Introduction
This paper analyzes the vital points to development in the books by William Easterly, Jeffrey Sachs, and Susan George & Fabrizio Sabelli. I will examine the three books one after the other, highlighting the similarities and differences. Importantly, the three books have diverse views about the developmental aid offered by the World Bank and the IMF. However, they all advocate for the establishment of stable, transparent and credible governance in the underdeveloped countries.
In his book, Easterly holds that many attempts to alleviate abject poverty in developing countries continue to fail since these countries ignore the response of individuals, firms, states and donors to incentives. Hence, he insists that lack of economic advancement in underdeveloped nations is not a crash of the economy, but a failure to employ economic techniques to experiential strategy work. However, Easterly doesn’t advise Third World countries to stop pushing for development. Instead, he suggests that the nations should enhance their governance institutions and collaborate with international players to establish incentives that increase economic growth (Easterly, xiii).
Most strategies that were laid after the World War II proposed that the investment on GDP would be proportional to economic growth. Hence, Western governments, IMF, and World Bank embarked on offering loans and other financial aids to developing nations in a bid to promote economic development. However, Easterly reveals that loans and aid didn’t go into developmental projects in the early years after World War II. He holds that there are no statistics that connect investments and economic growth. Importantly, it’s investment in innovation and technology that enhances employee productivity and economic developments, but not the investment in infrastructure.
Further, Easterly highlights the failure of nations to employ education and family planning as a way to alleviate poverty. He states that children in Third World countries don’t have access to sufficient education loans. In developing countries, there is no allocation of adequate funds to the necessary levels of learning. The educated individuals in corrupt nations choose to lobby the governance while engaging in actions that revamp revenue instead of actions that add value to the country. Most importantly, education offers returns in countries that have functional organizations and a market that demands skilled employees.
Additionally, Easterly analyzes the problems that accompany structural adjustment loans provided under by the IMF and the World Bank. Instead of establishing real economic reforms, governments profess to modify their strategies. Since shortfalls would induce an increase in loans and donors don’t seem to cancel aids, little incentives were available for states that wanted to modify their strategies. Further, forgiveness of debts hindered growth since leaders saw it as an opportunity to embezzle funds. Easterly maintains that loans and other financial aids should be offered to countries that have shown signs of developments instead of those that promise to grow. According to Easterly (21), financial aid should be increased to countries that show continuous development. In this argument, it is clear that corrupt countries won’t be in a position to acquire grants. Thus, developing countries will be pushed to use loans productively if they want a larger share.
Easterly insists that corrupt government officials usually hinder the citizens’ quest to alleviate poverty. Thus, he notes that incentives should be given to the right people (Easterly, 143). It’s very challenging for citizens to realize growth due to “knowledge leaks” and lack of the proper channels to match their skills. Countries that have few educated political leaders won't allocate sufficient incentives to invest in education. Easterly advice states to subsidize education, charge low taxes and invest in the private sector if they want to realize development and alleviate poverty. Easterly (217) notes that the government is the primary suspect in trashing incentives. Ideally, inhibitive trade policies impact the returns of the private sector. Thus, the government should create credible policies and institutions to enhance transparency in utilization of aids so as to realize productivity (Easterly, 289).
The End of Poverty by Jeffrey Sachs
In his book, Sachs is optimistic that abject poverty can be eliminated in all countries around the world by 2025, with a keen allocation of developmental aids. He holds that Third World countries lack the capacity to realize the backbone of their economy. Once, the nation recognizes the building blocks of its economy; it can establish itself in the international market economy and reduce or eliminate the demand of foreign aids.
Sachs introduces “Clinical Economics” in his book, a term that he uses to relate the nations to a patient. According to Sachs (288), nations are sophisticated structures that require different examination, comprehension of the situation, monitoring and analyses, and skillful standard of ethics. Clinical economics requires fundamental analysis to understand the specific problems so as to prescribe the right remedy. Numerous aspects can impact the nation’s capacity to establish its operation in the international market, such as corruption, social issues, illness, political, instabilities, underdevelopment, and physical hurdles. Sachs demonstrates Clinical Economics by offering cases studies of various countries such as Russia and explains the remedies he offered to those nations and their impacts. In his book, Sachs also highlights the economy status of some Third World countries such as Malawi.
He emphasizes that the Millennium Development Goals are a key to the elimination of abject poverty in most countries around the world. He holds that countries should show a will and ability to implement these goals and also monitor the advancement. Since there are set methods on how to achieve these goals, governments should take the advantage and work towards eliminating poverty in their countries. Importantly, Sachs headed the project that saw the formulation of the MDGs; thus, he holds a solid trust on the goals.
Additionally, Sachs provides some particular remedies like nullification of debts, and provision of methods to deal with malaria in Sub-Saharan Africa. He holds that elimination of poverty around the world requires huge funding from the IMF and World Bank; he suggests that developmental aid should be increased significantly. Sachs (290) notes that the economically advanced countries are in a position to “pull” the developing nations out of abject poverty.
Faith and Credit: The World Bank’s Secular Empire by Susan George & Fabrizio Sabelli
In their book, George and Sabelli, disapprove the notion that the World Bank is meant to promote development in the developing countries. According to them, the World Bank is an institution that promotes redistribution of funds from Third World countries to the economically advanced nations. Additionally, they don’t support the notion of the free market since they believe that Third World countries can’t trade fairly with the elite countries. In the case of countries such as Taiwan who have realized fast economic growth, the World Bank fails to highlight that these countries implemented right policies in the 1960s (George and Sabelli 65).
George and Sabelli hold that underdeveloped countries require credible and willing governments of if they want to realize development. They disapprove the idea of the free market and advocate for more involvement of the government in trade. Importantly, George and Sabelli recommend currency restriction and regulation of exchange rate, extensive government responsibilities in economic activities and protection. The authors note that involvement of the government in economic activities will stir development since there will be accountability of public institutions and the private sector.
Regarding the World Bank, George and Sabelli insist that the system should be abolished. They maintain that World Bank has failed to understand and tackle the problems of the developing nations. According to the book, economic advancement in the underdeveloped countries is more attached to governance rather than the provision of developmental aids as advocated by the World Bank. Additionally, the bank doesn’t fund programs that protect the environment as it claims.
George and Sabelli (58), holds that foreign aids from institutions such as the IMF to the developing countries should boost nation’s economic status and its ability to lure foreign investors by eliminating trade hurdles.
Conclusion
The three books advocate for allocation of developmental aid from the World Bank. While the books by William Easterly and Jeffrey Sachs, advocate for additional funding for developing countries, the book by Susan George & Fabrizio Sabelli disapproved additional funding. In fact, George and Sabelli view the World Bank as a misplaced institution that favors the developing countries only. All the three books agree that credible governance is necessary for developing countries if they want to realize economic development. They advocate for the establishment of credible institutions that will oversee transparency in the utilization of developmental funds. Also, they rebuke corruption and embezzlement of funds in the developing countries.
Works Cited
Easterly, William Russell. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. Cambridge, MA: The MIT Press, Cambridge & London, 2001. Print.
George, Susan, and Fabrizio Sabelli. Faith and Credit: The World Bank’s Secular Empire. London: Penguin Books, 1994. Print.
Sachs, Jeffrey D. The End of Poverty: Economic Possibilities for Our Time. New York: Penguin Press, 2005. Print
