Great Expectations: Rich Donors and Poor Country Governments

Abstract

Foreign aid donors' conceptions of governance have been formed in their own countries where governments enjoy substantial resources. They have largely failed to appreciate the enormity of the gap between the resources available to rich country governments and those available to poor country governments. The difference in resource availability means that if poor countries are to have domestically sustainable governments, they must be governments of much more limited functions, different in kind. The failure of both aid donors and recipients to adjust government obligations to their resource envelopes has created a huge unfunded mandate for poor country governments, undermining the rule of law and making accountability difficult if not impossible. Instead, government in poor countries must be much more limited in function.

Keywords: foreign aid, governance, government function, revenue, development, developing countries

JEL Classification: F35, H10, H20