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 / Summer 2008 / Issue 51(originally published by Booz & Company)


The Forgotten Lessons of the Marshall Plan

In the new Marshall Plan, the funds themselves should be dedi­cated to a variety of purposes. Above all, they should not go for government-designed economic development plans, whose track record has not been successful. Competitive regional funds would support ac­tivities based on best practices accumulated over the history of aid, from the original Marshall Plan to today. Almost every multinational, national, and NGO aid agency, for example, has some unit or program in place that does, indeed, help the private sector. For example, the U.S. government’s Overseas Private Investment Corporation maintains 37 equity funds that provide financing and technical assistance to small and midsized enterprises in emerging markets; aid agencies in France, the United Kingdom, and the Netherlands have similar programs; and the European Bank for Reconstruction and Development and the Inter-American Development Bank have supported a variety of business-focused funds in Eastern Europe and Latin America, respectively.

The Software of Business
This leads to the last key element of a Marshall Plan for Africa: As with the original, the business sector must lead it. Administrators and decision makers should, once again, be drawn from that sector, present in flesh as well as spirit. Like the original, the plan should focus on business infrastructure. In Africa, that would mean not just hardware — upgrades in electricity distri­bution, telecommunications, and transportation — but also a sort of software. This software would include financial institutions, business schools and associations, anti-corruption units, and courts, all of which must be improved or created in most African countries to enable their business communities to expand.

Projects with a business core tend to be less popular than government- or NGO-based plans — after all, charity touches the heart, and business does not. The original Marshall Plan started out with the support of only 14 percent of the U.S. public. But an aggressive in­formation campaign by the Committee for Economic Development, a group of American business leaders, won over the public. Something similar might be needed for this new plan, but business leaders have been conspicuously absent from the growing debate on African poverty. There is a historical reason for this; in the 1960s, when their nations were formed, most African political leaders decided specifically to develop through government, not private, investment. Because the businesses in their nations were largely owned by non-Africans (Indians, Lebanese, Syrians, French, British, and Portuguese), the political leaders felt that supporting businesses would not help governments deliver services to their own people. In addition, in those years just after Sputnik, it was not clear whether state-centered economic development patterned after Soviet and Maoist Communism would succeed or fail. Now we know.

Despite its scale and speed, the original Marshall Plan was an incremental program. It built on what came before — it made existing European businesses stronger. A Marshall Plan for Africa would do the same: It would take different kinds of African businesses a step further in their development. The overall effect would represent the sum of many small actions. That’s how a market system works. It could also be a template for other distressed parts of the world — parts of Latin America and of the Middle East, for example.

In his speech, George Marshall was very clear that the “breakdown of the business structure of Europe during the war” was the problem that aid most needed to solve: “Our policy is directed not against any country or doctrine but against hunger, poverty, desperation, and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist. Such assistance, I am convinced, must not be on a piecemeal basis as various crises develop.”

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