volume of aid in the 1990s. As a percentage of developing countries’ GDP
aid fell from 1.4 per cent in 1990 to 0.5 per cent in 2000 (see Table 4.2), to
the extent that more rather than less aid is required in some regions, notably
Africa, where the economic growth needed to reduce poverty cannot be
achieved by domestic savings and private investment.
Ideas about neo-colonialism and dependency provide inadequate guid-
ance to the political consequences for Third World societies of aid and other
economic factors. However, while the emphasis in aid policy now tends to
be on requiring recipient countries to feel ‘ownership’ of projects and pro-
grammes and responsibility for their success, aid still comes with condi-
tions attached. These now recognize the threats posed by economic reforms
and restructuring and aim for laudable objectives such as poverty relief and
good governance. But developing countries need to demonstrate that they
provide an environment of policy and institutions that is conducive to
reform. The latest doctrine on aid is that it should support reforms that orig-
inate from domestic political pressures. In the past aid has not been very
successful in stimulating donor-specified reforms. Recognition that aid is
likely to be more effective and sustainable if a recipient country’s govern-
ment feels committed to the project now informs aid policy, but govern-
ments still know what donors expect and require. Throughout the 1990s aid
to countries judged to have poor policy environments fell sharply. And
donors continue to allocate substantial amounts of aid for strategic and
commercial reasons, despite the ending of the Cold War. Debt relief also
comes with strings attached. For example, the IMF and World Bank’s
Heavily Indebted Poor Countries Initiative requires ‘sound’ economic
84 Understanding Third World Politics
Table 4.1 Debt servicing, 1990–9Region % of GDP % of exports of goods
and services
1990 1999 1990 1999Arab states 5.5 3.6 14.7 11.4
East Asia 3.8 5.2 15.7 15.8
Latin America 4.0 8.1 23.6 41.6
South Asia 2.6 2.8 20.0 16.6
Sub-Saharan Africa 3.9 4.6 19.7 14.3
Developing countries 4.0 5.8 18.7 22.3
Least developed countries 2.7 2.8 15.5 13.0
SOURCE: UNDP (2001), table 15, p. 194.