A Marshall plan for Africa?

The idea of a Marshall Plan for Africa often resurfaces in the media as a good idea, because it worked so well for Western Europe. 

It's often brought up as a "golden ticket" or "silver bullet" for African economic development by commentators that might only have cursory knowledge of what the Marshall plan entailed, whether and how it could work, and how it compares to development efforts for African countries in the 21st century. 

There's no doubt that the Marshall plan carries with it a strong intellectual legacy. It marks the post-WWII return to ‘development’ that originated during the war. 

It is often forgotten that the large-scale development, and particularly the reconstruction efforts that took place in the late 1940s and the 1950s, occurred all in Western Europe. 

What we now colloquially refer to as the ‘World Bank’ is a group of institutions, but what most of us are probably thinking of when we say the World Bank, is the International Bank of Reconstruction and Development which was founded at the Bretton Woods Conference in 1944 in order to support the new world order following the end of the second world war.

 Its first loan was given to France, for building schools.

The Marshall plan went beyond the World Bank, but was part of a US-supported initiative to get Western Europe up and running as quickly as possible. Conventional wisdom is that it worked, and therefore there are many calls for it to be repeated in other scenarios.  

The Marshall Plan cannot be separated from its local and historical context and therefore not easily transplanted to other contexts. 

Is the Marshall plan a good recipe for all places and all times, and we just haven’t thought about using it yet, or are there special conditions that made the Marshall plan work? I think the latter.

The first factor, it is the sheer importance given to Europe as compared to Africa. 

Currently, Sub-Saharan African economies represent something like just 3 percent of the world's GDP. Whereas the total GDP of Western Europe in the 1940s was estimated to have been about 30 percent of the world's GDP.

This says a lot about the high stakes at the time, and the importance of getting it right. 

In 1945 the world economy was in ruins. If one could restore the countries from Norway in the north to Italy in the south, and west of the Berlin wall, it meant that one third of world of the world's economic supply and demand could be restored. 

Even if the US or Germany has a solution for how Africa can prosper, today the stakes, and therefore the political will and desire to make it happen, is relatively low.

The second point is about politics versus economics. 

Economic historians of Europe have been trying to explain the Golden Age from the the late 1940s through to the 1970s, and the financial weight of the Marshall plan does not come up as the main driver, except it is mentioned as an indirect catalyst. 

The important lesson from the Marshall plan and one which goes beyond the cash is the commitments that were made towards openness and democratic rule, and perhaps most important of them all – the willingness to cooperate with each other. 

The seeds of the creation of the economic cooperation that ultimately has now lead to the coalition known as the EU was planted by the Marshall plan. The main point here is that it was not the Marshall plan per se, but rather what it led to, that really mattered. 

Thirdl, we have to deal with the question of whether it is a case that of never trying it before. The answer is that it has been tried, but as hinted to above, not with the right incentives in mind. 

The famous article, "The Marshall Plan: History's Most Successful Structural Adjustment Program", is instructive. It was written in the 1990s, looking back at a decade of failure. The referral was towards the incredibly unsuccessful structural adjustment programs implemented across the 1980s and 1990s in Latin America, Asia and Africa. 

Why did the structural adjustment programs in the 1980s fail? This one of the thorniest issues in development studies. There is a long line of literature that convincingly documents why and how some of the reforms were directly harmful and counterproductive. 

There is huge dissonance as to whether the problem was the policies, or that whether the structural adjustment was only partially implemented. 

This is notable. There is hardly anyone who looks back at the economic development in Europe that thinks that a common market, a common allegiance to liberal democracies and liberal economic policies were the cause of economic decline in Europe. 

It clearly led to different kinds of problems in Greece and Germany, but the disagreement is more about the relative importance of equity, nationalism and progress. On the other hand, there is disagreement about the virtue of the policy package to be implemented in low income countries.

So lets sum it up. It is generally agreed that the success of the Marshall plan was not because of its financial muscle. The commentators who suggest that a Marshall plan is needed for Africa, and by saying imply that ‘official development assistance should be ramped up’ - the reference to the Marshall Plan is misleading. 

One would rather have to point back to the history of official development assistance to Africa and then make the case if more was done, more could have been achieved.

The largest lesson of the Marshall Plan is not about the size of aid flows. It is more importantly about mutual credible commitment to reform and cooperation. 

The US had a real economic and military interest in a liberal and successful Western Europe. On the other hand, for European countries it was not about agreeing about condition one, two and three, and then qualifying for x amount of dollar assistance in return. 

It is a bigger game of being included in the western sphere of political and military influence. 

How likely is a Marshall Plan type of reform for Africa? 

Currently, it does not look imminent or likely. The most likely incentive for Europe to undertake such an investment would be the current strength of xenophobic fears of migration from the continent, but that does not strike me as a likely foundation for a long-term holistic commitment to economic collaboration and development in Africa.