Pakistan Institute of Development Economics



Anne O. Krueger, Constantine Michalopoulos and Vernon W. Ruttan.Aid and Development. Baltimore: The Johns Hopkins University Press.1989. xiv + 386 pp.Price: U.S. $ 52.00

Foreign aid has been the subject of much examination andresearch ever since it entered the economic armamentarium approximately45 years ago. This was the time when the Second World War hadsuccessfully ended for the Allies in the defeat of Germany and Japan.However, a new enemy, the Soviet Union, had materialized at the end ofthe conflict. To counter the threat from the East, the United Statesundertook the implementation of the Marshal Plan, which was extremelysuccessful in rebuilding and revitalizing a shattered Western Europe.Aid had made its impact. The book under review is by three well-knowneconomists and is the outcome of a study sponsored by the Department ofState and the United States Agency for International Development. Themajor objective of this study was to evaluate the impact of assistance,i.e., aid, on economic development. This evaluation however, was to bebased on the existing literature on the subject. The book has five majorparts: Part One deals with development thought and developmentassistance; Part Two looks at the relationship between donors andrecipients; Part Three evaluates the use of aid by sector; Part Fourpresents country case-studies; and Part Five synthesizes the lessonsfrom development assistance. Part One of the book is very informative inthat it summarises very concisely the theoretical underpinnings of theaid process. In the beginning, aid was thought to be the answer tounderdevelopment which could be achieved by a transfer of capital fromthe rich to the poor. This approach, however, did not succeed as it wassimplistic. Capital transfers were not sufficient in themselves to bringabout development, as research in this area came to reveal. Thedevelopment process is a complicated one, with inputs from all sectorsof the economy. Thus, it came to be recognized that factors such as lowliteracy rates, poor health facilities, and lack of socialinfrastructure are also responsible for economic backwardness. Part Oneof the book, therefore, sums up appropriately the various trends indevelopment thought. This is important because the book deals primarilywith the issue of the effectiveness of aid as a catalyst to furthereconomic development.

Mir Annice Mahmood

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