Dambisa Moyo’s new book, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, has received a great deal of attention in the last few months. Moyo’s book is a must-read for any person interested in the question of why some countries are rich while others remain stagnant or poor.

The fundamental idea of this paper is that government is not and cannot be the source of successful clustering. While clustering is valuable to the economy, governments do not have access to the knowledge that would enable them to promote the successful development of clusters. We view this epistemic problem bureaucrats face as insurmountable; if anything, it puts a clear limit on the capacity of government to create clusters.

The fatal conceit is the assumption the world can be shaped according to human desires.  With the collapse of socialism, central planning has been discredited as a viable means of economic organization.  However, the fatal conceit of central planning continues through foreign interventions in the form of foreign aid and foreign military interventions.

A growing literature focuses on the “global public goods” generated by foreign interventions. Global public goods have traditional public good characteristics, but their benefits extend across societies and regions. Coyne and Ryan analyze how well-intentioned foreign interventions to provide global public goods can also result in global public bads.