A must-read for policymakers, academia and other stakeholders

By Hamid Mahmood

Aid is part and parcel of the development package in South Asia. The book titled ‘Foreign Aid in South Asia: Emerging Scenario; offers insights into the role of foreign aid in South Asia’s development. It covers the chronology of aid development and provides a detailed examination of South Asian countries’ adaptation to changes taking place in the context of development, security and post-conflict economies.

The book is divided into five sections and eleven chapters. The first four chapters discuss changed global aid efforts and alternate policy options for making aid more effective. The authors identify potential areas that need attention to improve aid delivery.

Some of them include emergence of new players and new avenues of cooperation, including South-South and trilateral cooperation, for influencing development through aid reforms.

The authors also link aid to the growth paradigms taking place in India and discuss the historical sequence of aid inflows, effectiveness of aid disaggregation in the context of India, and ways to address the gaps.

In chapters five and six, the authors discuss the nexus between aid and security in the context of Afghanistan and Pakistan. The next two chapters are on policy priorities and the role of aid in post-conflict economies with cases on Nepal and Sri Lanka.

In these chapters, the authors have stipulated the imperatives of crisis and the opportunities that they have created in directing future aid inflows. They also point out that the Dutch disease phenomenon is evident in South Asia, and hence recommend policy reforms to channelise aid towards more productive areas. The last three chapters discuss the role of aid in two least developed countries (Bangladesh and Bhutan) and a vulnerable economy (the Maldives). The authors provide solutions for making aid meaningful in these countries.

The uniqueness of the book lies in the diversification and sequencing of topics. It presents to the readers the importance of aid and issues involved in it through historical presentation, country-specific case studies, and linkage of aid with broader policy objectives in terms of development and policy reforms. South Asian countries show mixed response to and impacts of foreign aid keeping in view aid inflows, domestic resurgence, absorptive capacity, resource mobilisation, disbursement, channeling of aid, policy priorities and governance portfolio.

The authors argue that although donor-led policy priorities in making use of foreign aid were successful after the Second World War, in recent years, South Asian countries have been successful in getting foreign aid linked more with their domestic policies. They support their assertions through country cases in which they have used different methodologies to gauze the developmental impact of foreign aid.

The book argues that foreign aid, in general, has lost its rigour as a developmental tool. However, if the sectoral significance of foreign aid is explored and its impact is evaluated in a better framework of analysis, it can be found that foreign aid can still influence developmental outcomes. This calls for future research and understanding of the importance of aid for South Asia’s development.

In conclusion, the book discusses several aspects of foreign aid in South Asia and provides a framework for managing future aid inflows to South Asian countries in an effective manner. The case studies of individual countries have illustrated policy priorities of governments with regard to foreign aid. Therefore, it is a must-read for policymakers, academia and other stakeholders who have a keen interest in issues of foreign aid in South Asia.

(The reviewer is Senior Economist, Planning Commission, Government of Pakistan.)