This refers to the paradoxical situation wherein countries that are blessed with good institutions to achieve economic growth have no need for foreign aid, while countries that possess poor institutions that inhibit their growth do not benefit from any amount of foreign aid. It was proposed by British development economist Peter Thomas Bauer in his 1971 book, Dissent on Development . The paradox of aid emphasises the importance of good institutions to achieve better economic conditions in the developing world, and the ineffectiveness of foreign aid to achieve a substantial improvement in living standards in the absence of the right institutions.
