Absorptive Capacity contd.

Reuben Abraham follows up on the absorptive capacity debate "...since the Marshall Plan worked, surely a similar initiative will work in Africa too. Well, let's look at the numbers first. If this idea were in fact true, Africa would have been well developed by now, given the trillion dollars that have been poured into the continent in the last 50 years (by way of comparison, the Marshall Plan consisted of $13 billion worth of assistance, or $130 billion, once you adjust for inflation). In fact, most of Africa is substantially worse off today than when aid first started to flow in. Instead, the money has been frittered away on such development projects as clearing the jungle in the middle of the Congo to build a new runway on which the Concorde could land to ferry Mobutu and his family to Disneyland and France. No prizes for guessing where the money to clear the forest, lease the Concorde etc came from.
So, what is the difference between post-war Europe and Africa which explains this discrepancy? Well, it links directly to the absorptive capacity issue. Japan, Germany etc were well functioning countries with solid institutions (legal system, education system, banking system etc) before they were visited by the horrors of the war. So, an infusion of capital could be put to use easily and efficiently to rebuild the institutions destroyed by war. It was simply a matter of getting trained teachers or bankers back to work, rather than training an entire cadre from scratch. By contrast, when the Belgians left the Congo, there were exactly 17 college graduates in a country the size of western Europe. To imagine that a country with 17 college graduates could absorb large infusions of aid (without any institutions in place) just because Germany and Japan (which were superpowers before the war) did so is bordering on the insane..."
via Zoo Station