Between Egypt and Jordan: Diverging Paths on Foreign Aid and Reform in the 1990s

Abstract

Scholars have long recognized the potentially negative impact of foreign aid on economic and political development in non-industrialized states. In the early 1990s, John Waterbury observed that infusions of external capital — including US foreign aid and donor contributions from the international community — had enabled the Egyptian government, for example, to forestall critical economic reforms in the late 1970s and early 1980s, a situation that continued throughout the 1990s and now on into the twenty-first century.¹ Subsequently, scholars of the development of ‘rentier states’ have argued that exogenous revenues, such as foreign aid or high levels of oil revenues (as in the Gulf states), insulated many Middle Eastern rulers from political opposition, enabling them to deflect pressures toward economic and political liberalization.² Among these are Michael Fields, who, in Volume I of this series, pointed out the converse observation that countries without oil resources or access to huge amounts of foreign aid, such as Morocco and Turkey, have pursued both economic structural reforms and political liberalization.