The End of Poverty: Economic Possibilities for Our Time

Abstract

THE END OF POVERTY: Economic Possibilities for Our Time Jeffrey D. Sachs, foreword by Bono New York: Penguin Press, 2005. xvii, 397pp, $40.00 doth (ISBN 1-59420-045-9)The title of this book is a bit misleading. It does not propose a strategy to end poverty, but instead to end extreme poverty in Africa. There is extreme poverty elsewhere in the third world, principally in South Asia, but most countries outside of Africa, even in South Asia, have gotten a foothold on the ladder of development and are beginning to climb, on their own, out of extreme poverty. Africa, Sachs contends, is a special case. It cannot even get onto the bottommost rung of the development ladder because it is caught in a poverty trap from which it cannot escape without a substantial increase in the level of foreign assistance it receives from the rich countries of the world.Jeffrey Sachs is not the to write a popular book to persuade governments and the public at large in rich countries to increase the level of aid they give to poor countries on the grounds that it is not only the right thing to do, but also in their own national interest. Forty-five years ago, W.W. Rostow published his famous The Stages of Economic Growth: A Non-Communist Manifesto, which had the same aim and a very similar line of argument. Rostow, like Sachs, argued that developing countries were caught in a poverty trap, from which they could not escape without a significant increase in foreign aid. Rostow, like Sachs, argued that if the required levels of foreign aid were forthcoming, developing countries would be able to take off into self-sustained growth, or as Sachs puts it, they would be able to get a first foothold on the ladder of development. Rostow argued that it was in rich countries' own national interest to help the poor attain self-sustained growth because this was the best strategy for preventing the spread of communism to the third world. Sachs argues that ending extreme poverty is an essential part of an effective strategy to defeat international terrorism: we need to address the deeper roots of terrorism in societies that are not part of global prosperity, that are marginalized in the world economy, that are bereft of hope, and that are misused and abused by the rich world, as have been the oil states of the Middle East (216).In the 1960s, levels of foreign aid to developing countries did in fact increase, but nowhere near what was advocated as the minimum required for self-sustained growth in developing countries. In spite of this, over the past 40 years, most developing countries have, in fact, achieved sustained economic growth. As Sachs explains, in 1960 upwards of five-sixth of the world's population lived in extreme poverty-today the share is about onesixth, or approximately 1.5 billion people, mainly in South Asia and Africa. How did developing countries accounting for about two-thirds of world population manage to escape the poverty trap and get a foothold on the ladder of development without large amounts of foreign assistance? The answer can only be that they were not trapped in poverty in the place, but instead were victims, in large part, of their own misguided and inappropriate policies. In one country after another, economic policy reforms have brought about a rapid acceleration of economic growth and rising prosperity. Nowhere is this more evident that in the experiences of China and India, which are nicely summarized in chapters eight and nine, respectively.The one part of the world where economic growth has not accelerated-and in fact has decelerated-is Africa. In Africa, unlike South Asia, the absolute number and population share of people living in extreme poverty are rising. Is this because African countries have not implemented, or have not been successful in implementing, economic reforms comparable to those that have succeeded elsewhere in the world, perhaps because of poor governance, corruption, or other problems of their own making? …