Overcoming Stagnation in Aid-Dependent Countries

July 19, 2005

Read the brief

In this book, Nicolas van de Walle identifies 26 countries that are extremely poor and grew little if at all in the 1990s. His sample excludes North Korea and countries where civil war explains some of their failure to grow (Afghanistan, Sierra Leone, Sudan, Tajikistan and others). The 26 countries have limited infrastructure and human capital and the small size of their markets deter private savings and investment. Aid was meant to help overcome these problems, and these countries received a lot. Yet they have failed to grow. What is wrong? Is foreign aid a solution or part of the problem? What changes might make aid more effective? Given these countries require the financial and technical resources of the West, why haven’t aid programs made a difference?

Van de Walle blames their economic failure mostly on the venality and incompetence of their political leadership. He analyzes the contradictions and tensions faced by the aid community in poorly run countries, providing a sobering analysis of the perverse effects of aid where the politics is all wrong. Too often, resources provided by foreign aid keep the wrong government in office, and undermine adoption of economic as well as political reforms. Bad government combined with aid, in short, hurts poor countries – and particularly the poorest people in those countries. Despite good intentions, little progress has been made in implementing announced “reforms” of the aid business itself. A constituency for reform is lacking, in the donor countries and in the recipient countries, where those in power benefit from the status quo.

What others are saying about Overcoming Stagnation in Aid-Dependent Countries

“Overcoming Stagnation in Aid-Dependent Countries is essential reading for every development professional, scholar, and policymaker. One of the most trenchant and relentlessly honest analysts of foreign aid, van de Walle brilliantly demonstrates in this work the importance of addressing governance and political problems in the poorest countries if foreign aid is to successfully promote economic development. In surveying the current landscape of foreign aid and aid reform proposals, van de Walle powerfully demonstrates why aid remains necessary and why translating good intentions into genuine reform has proved so elusive.”
—Larry Diamond
Senior Fellow, Hoover Institution

“Nic van de Walle is the world’s leading scholar of the politics of aid and structural adjustment in poor countries. In Overcoming Stagnation in Aid-Dependent Countries, he convincingly demonstrates that the perverse effects of corruption and negative incentives currently at play in many of the poorest countries undermine the effectiveness of foreign aid. He doesn't stop there; he proposes concrete alternatives to transform the relationship between donors and poor countries.”
—William Easterly
Professor of Economics, New York University

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