Just as welfare as a way of life is out of vogue in U.S. domestic politics, so too is aid to countries that remain dependent for decades. A strategy of greater aid selectivity might also help to reestablish domestic political support for overseas assistance in this country. Indeed, there is increasing agreement that aid is currently burdened with too many rather than too few conditions. The key characteristics are open trading regimes, realistic exchange rates, low budget deficits and low inflation rates, relatively small public sectors, and markets unencumbered by consumer and producer subsidies or other distortions. There is still a broad debate about more general development objectives and about what constitutes effective aid.
Growth is by no means the sole objective of aid.
Yet it is difficult to advance broader development goals without it. The track record of the fast-growing economies in East Asia supports this view, as do the more recent experiences of countries ranging from Chile and Costa Rica to Mauritius and Botswana. In the authors' view, donors should generally focus on the objective of growth, and should be wary of trying to use aid to induce political reforms. Targeted assistance for specific political purposes such as supporting local human rights organizations and media is useful. But ambitious efforts to shape countries' politics by fine-tuning aid flows do not appear appropriate in most cases.