Has China Kicked Away the Ladder from other Poor Countries?

June 21, 2008

Publication day

June 21, 2008

Can states be built?

June 21, 2008
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Do you read Prospect magazine? If not, why not? I don’t always agree with it, but it gets the intellectual juices flowing. The current (June) issue includes a counterintuitive piece on food prices (high prices do not increase global hunger – I disagree), a brilliant essay arguing that video games foster collaboration, not individualism, (assuaging my parental guilt, as my teenage son is currently glued to Grand Theft Auto instead of exam revision) and, best of all, a great, angry blast on how the wrong kind of aid has failed to build effective states, and has in fact often undermined them.

The author of the article, Clare Lockhart, is director of the Institute for State Effectiveness, and has just published a book on the issue with Ashraf Ghani, the globetrotting former Afghan Finance Minister (and chair of the Institute). Much of what they say echoes Oxfam’s recent paper on Afghanistan.

The article fits nicely with the central argument of From Poverty to Power – that the best path to development lies through the combination of Active Citizens and Effective States. What to do about failing or fragile states like Afghanistan, or Somalia, or Zimbabwe, is perhaps the most intractable, as well as one of the most important, questions in development.

Lockhart argues that not only has much of the estimated $6bn-$10bn in development and humanitarian aid to Afghanistan since January 2002 has been wasted (the vagueness of the numbers rather bears that out!). But worse than that, ‘there is growing evidence that aid projects can undermine reconstruction.’ The channels are familiar to anyone in the aid business – first the IMF and World Bank impose salary caps on the government, then hundreds of donors, UN agencies and NGOs descend on the country, paying multiples of official wage rates. The result? Rapid depopulation of the state sector, as professors, engineers etc end up driving white aid agency land cruisers for a living.

Lockhart quotes an Afghan woman who had lost most of her children to the Soviets and the Taliban saying to her ‘I have heard that Afghanistan has been promised $4bn. The president should put it in a trust fund and spend it wisely to rebuild the civil service.’ If only. What few national programmes have been run by the government – on transportation, nationally coordinated healthcare or mobile phone franchising, have performed rather well. A ‘national solidarity programme’ that gives a block grant of $20,000-$60,000 to every village in the country has both empowered ordinary people, and helped them believe that the state can actually work in their interests. But these are the exceptions. Elsewhere aid is more like oil, severing the social contract between citizen and state, stifling the political development that is the only long term guarantee of Afghanistan’s future.

So is there anything aid can do to help fragile states become effective ones? Definitely. Good aid has played a crucial role in the take off of development poster children such as South Korea or Botswana. The difference was that the aid built, rather than undermined, effective states. Aid money has to strengthen, not bypass, state institutions, channelling money through them, rather than the tangle of competing private contractors (including some NGOs) that has sprung up around the aid industry. Rather than merely lamenting the lack of political will of ‘good governance’ (which is indeed often at the root of the problem), donors must think longer term – if this generation of leaders in a given country is beyond the pale, how can we help improve things in the longer term? Answers include investing in the younger generation – the leaders of tomorrow, and creating the conditions for a flourishing civil society, whether of popular organizations, media or business associations, that can broaden the base of future leadership, and help hold it to account.

Painstaking, frustrating work that is much harder to flag for a visiting minister than a nice shiny new building or a juicy contract for a friendly corporate, but in the long run, much more worthwhile.


  1. I always read prospect magazine. It usually contains two or three thought provoking articles on international issues from articles by Ha Joon Chang on protectionism and trade justice to a different perspective on the Israel Palestine conflict in an editorial written by a Hamas official.

    Another item of essential reading on international issues is the new internationalist magazine. Though sometimes overly preachy their issue on street children written by street children about their every day lives and aspirations should have won awards. It is also a great source of inspiration, righteous indignation, and information about new trends in the global justice campaign.

  2. It’s very unglamorous to support governments instead of starting a new flashy fund, sometimes accompanied by celebrity endorsement. Western powers’ paranoia about corruption in developing countries further debilitates helping developing countries in a sustainable manner. In fact, only 5% of illicit capital flows is the result of corruption. A whopping 64% is the result of commercial activity aided by tax havens. Betteraid.org has a blog on these issues.

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