Do No Harm: Aid, Weak Institutions and the Missing Middle in Africa

Authors


  • She is grateful to Christine Park for help with data, and to participants in seminars at the Overseas Development Institute and the Center for Global Development and, for their generosity with comments on an earlier draft, Richard Auty, Kim Elliott, Todd Moss, Arvind Subramanian and Nicolas van de Walle. The study was supported in part by a grant from the Australian Agency for International Development to CGD for work on fragile states, and by other CGD supporters.

Abstract

The implicit assumption of the donor community is that Africa is trapped by its poverty, and that aid is necessary if it is to escape. This article suggests an alternative view: that Africa is caught in an institutional trap, signalled and reinforced by the small share of income of its independent middle strata. Theory and historical experience elsewhere suggest that a robust middle-income group contributes critically to the creation and sustenance of healthy institutions, particularly of the state. The article argues that if external aid is to be helpful for institution-building in Africa's weak and fragile states, donors need to emphasise not providing more aid but minimising the risks more aid poses for this group.

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