In the first part of this essay will shortly summarize Easterly’s idea; while the second part will discuss its’ strengths and weaknesses. Several compliment notions to endorse Easterly’s argument are provided in this review.
Easterly (2002) noted that there were some success story for adjustment lending in some countries. However, he identified more countries were not successful. These failures are due to two main reasons. First, it was because there were no policy adjustmens from the recipient countries to decrease inflation. Second, it was because the government could not control inflation during transition period. Furthermore, the other polices which he revealed are high black market premium, budget deficit policies, and negative real interest. Easterly also recognise donors’ characteristics which triggered recipient co...
... middle of paper ...
...id contest are not comprehensive enough and also not consistent with his pessismist view on aid. Hence, his chapter is still valuable and relevant with current situation where there are still many developing countries are highly depend on foreign aid.
Booth, P 2012, ‘Does foreign aid make the poor poorer?’, Economic Affairs, Wiley Online Library, Vol. 32, no. 1, p.1,
Easterly, W 2002. ‘The loans that were, the growth that wasn’t’ ,The elusive quest for growth: economists adventures and misadventures in the tropics,’ The MIT Press, Cambridge, Massachusetts, pp.101-120
Moyo, D 2009, ‘Why foreign aid is hurting Africa’, The Wall Street Journal, viewed 07 February 2012,
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