From Poverty to Prosperity?

The Millennium Village Project aims to "end extreme poverty" in Africa. But it's more likely to repeat past foreign aid mistakes.

The homepage of the Millennium Villages Project (MVP) declares, "Our generation can end extreme poverty." In 2005, the Project began its 10-year effort to do just that—in a group of 11 African villages, at least—through a comprehensive package of foreign aid focused on sectors like education, business, agriculture, and health. The Project has expanded since it's inception to cover 14 village clusters that are home to about half-a-million people across sub-Saharan Africa.

George Soros recently pledged $27.4 million to the Project, after giving $50 million in 2006. The Project estimates that the portions of the initiative it funds cost $300,000 to $400,000 per village per year. Local and national governments, partners like non-governmental organizations and corporations, and local communities are supposed to fund the rest.

At some sites, the aid interventions are worth as much as the average villager's salary, and the project boasts some impressive gains. Its latest report, "The Next Five Years: 2011-2015," states that interventions caused crop yields to double and even quadruple in some areas, increased the share of households with access to clean drinking water from 17 percent to 68 percent, increased primary school enrollment by 10 percent, and decreased malaria prevalence by 72 percent. (Though some outside experts have questioned the project's claims.) But these accomplishments are entirely different from spurring development or ending poverty.

Nor is this the first time such ambitious interventions have been attempted. Much of the MVP's agenda would cause a sense of deja vu for people involved in the World Bank's 112 "integrated rural development" projects in the 1970s and 1980s. The Bank's projects did have a narrower focus—mainly the agricultural sector. But they followed the same "integrated" model that the MVP claims makes it unique, often combining efforts to resuscitate agricultural production with transportation infrastructure projects. MVP devotes part of its FAQ page to explaining how it differs from previous efforts.

The World Bank has all but admitted that its projects failed. The Bank noted in a 1990 report that many of its projects were too complex and ambitious for local leadership and institutions to handle, which led to poorer results than those for projects with simpler designs. (The MVP prides itself on how much more complex and ambitious it is than previous aid efforts.) The Bank also said that many benefits didn't last beyond the completion of projects because locals weren't involved enough and recipient governments became uninterested once funding was disbursed. It further noted that "the larger policy environment was perhaps the single most important factor in the success or failure of the projects."

Yet the limitations that hindered the World Bank 30 years ago still exist today. In The Wilson Quarterly, aid consultant Sam Rich noted that some of these issue—strained relationships between project organizers and local governments, challenges due to national policies, little local participation, lack of sustainability—were troubling the project just two years in.

The MVP works with local and national governments and plans to collaborate with national bureaucracies to scale-up the initiative in the future. It also claims to focus on "participatory community decision-making," even if one shopkeeper in an Ethiopian Millennium Village told development economist Owen Barder that he thinks, "It is all decided by a Professor in New York."

The "Next Five Years" report features an introduction by that "professor in New York," Jeffrey Sachs. A Columbia University economist who leads the MVP, Sachs wrote that it must "create a system for success" to achieve its goal of improving African villagers' lives.

The Millennium Villages are supposed to be test cases for establishing that system. The project's backers hope to prove that its system for development works, before expanding the initiative to regional and national levels, eventually covering the African continent. The sites also serve as experiments in the Big Push theory of development, prominent among some economists since the mid-20th century and espoused by Sachs in his 2005 book, The End of Poverty. The theory holds that a large, comprehensive investment can transform economies of poverty-wracked places, essentially jump starting their development. Big Push proponents say that instead of relying on gradual growth and change for development, a transformative push can generates economies of scale and positive spillovers that revolutionize societies.

Budapest-born economist Peter Bauer, an early skeptic of foreign aid as a driver of economic growth, denounced the Big Push theory decades ago. He argued that no one—least of all foreign advisors—really knew what investments or policies would drive economic growth, an insight that emphasized the importance of freedom from centralized state control or planning.

Bauer called arguments for foreign aid axiomatic: Aid proponents regarded progress as a sign that aid was working and a lack of progress as a reason for continued aid. But recent growth due to the newly opened economies of India and China—countries that receive tiny amounts of foreign aid relative to GDP—may be the best evidence yet that it takes much more than aid for the masses to pull themselves from poverty to prosperity.

A large donation by George Soros may help improve the lives of a limited number of poor African villagers, but the real system that has improved billions of lives throughout history wasn't an aid package crafted by technocrats. The innovations and adaptations that result in people being able to put food in their own mouths—let alone in being able to buy their own mosquito nets—have resulted mostly from the freedom to exchange ideas, technologies, and goods. Despite the hopes of the Big Push theory, the World Bank's "integrated rural developments," or the carefully crafted system to transform the Millennium Villages, there is no "clearly defined pathway" for development economists or international philanthropists to make this happen.

Tate Watkins is an intern at Reason magazine.