Foreign aid has been the subject of much examination and
research ever since it entered the economic armamentarium approximately
45 years ago. This was the time when the Second World War had
successfully ended for the Allies in the defeat of Germany and Japan.
However, a new enemy, the Soviet Union, had materialized at the end of
the conflict. To counter the threat from the East, the United States
undertook the implementation of the Marshal Plan, which was extremely
successful in rebuilding and revitalizing a shattered Western Europe.
Aid had made its impact. The book under review is by three well-known
economists and is the outcome of a study sponsored by the Department of
State and the United States Agency for International Development. The
major objective of this study was to evaluate the impact of assistance,
i.e., aid, on economic development. This evaluation however, was to be
based on the existing literature on the subject. The book has five major
parts: Part One deals with development thought and development
assistance; Part Two looks at the relationship between donors and
recipients; Part Three evaluates the use of aid by sector; Part Four
presents country case-studies; and Part Five synthesizes the lessons
from development assistance. Part One of the book is very informative in
that it summarises very concisely the theoretical underpinnings of the
aid process. In the beginning, aid was thought to be the answer to
underdevelopment which could be achieved by a transfer of capital from
the rich to the poor. This approach, however, did not succeed as it was
simplistic. Capital transfers were not sufficient in themselves to bring
about development, as research in this area came to reveal. The
development process is a complicated one, with inputs from all sectors
of the economy. Thus, it came to be recognized that factors such as low
literacy rates, poor health facilities, and lack of social
infrastructure are also responsible for economic backwardness. Part One
of the book, therefore, sums up appropriately the various trends in
development thought. This is important because the book deals primarily
with the issue of the effectiveness of aid as a catalyst to further
economic development.
American exceptionalism? Differences in the elasticity of preferences for redistribution between the United States and Western Europe