The geopolitics of international development (after foreign aid)
You can't have nice things without strategic independence and policy autonomy
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Foreign Policy magazine’s Fall 2025 issue has interesting essays on development. They are all worth reading, as they provide important perspectives on how the current geopolitical moment is reshaping the field of international development. This post explores what I consider to be the most interesting ideas in each essay. But before that, a brief framing is in order.
I: International development thinking and practice under multipolarity
The recent drastic cuts to U.S. foreign aid, which were part of a general trend among donors, generated lots of commentary on how development practice (as well as policymaking in low-income countries) should respond to dwindling aid cash.
Interestingly, so far the commentary on aid has featured very little discussion of the geopolitical implications of the decline of foreign aid, at least not among development experts. This is partially because development practitioners typically think of themselves as doing apolitical work in advancement of human welfare; and because they usually are neither trained nor incentivized to view politics (including geopolitics) as being central to the process of development. Indeed, much of the field is structured to circumvent (and I would argue undermine) regular order politics and political institutions.
So why should we care about the geopolitics of development in a multipolar world?
For two reasons. First, multipolarity will escalate global geopolitical competition. Consequently, high-income countries will more nakedly condition their aid-giving on strategic foreign policy objectives. We should also expect these countries to more explicitly lean on multilateral organizations for the same ends. Without undergoing (highly-unlikely) far-reaching reforms, the well-documented influence of high-income countries on organizations like the World Bank and IMF (see here, here, here, and here) and specific UN agencies will only intensify in the medium to long term.
The explicit use of foreign aid and development assistance in pursuit of geopolitical goals won’t necessarily be a bad thing. It’s what has been happening anyway, and bringing it above board would cure elites in low-income of their inexplicable naïveté and acceptance of aid dependency as a matter of course. More importantly, it will (hopefully) bring states back in and on the driving seat of setting their own development agenda. Decades of deputizing non-state actors to lead the push for structural change have yielded very few wins (mostly in public health). The elevation of state-to-state negotiations over development assistance might just be what’s needed to force elites in low-income countries to be a little bit more ambitious in their official thinking about development. Overall, a more competitive international system should expose (and hopefully punish) the complacency of unambitious elites.
In addition, it would be a net positive if these organizations (and other development players, including foundations, think tanks, and philanthropists) did not launder (whether deliberately or subconsciously) the externalization of the policy priorities of high-income countries (often draped in “rigorous expertise”). This is a much bigger problem than most people like to admit. Given the ideational and operational influence that these institutions have on policymakers in low-income countries, it would be ideal if it was clearer when they were hawking objectively useful and relevant-for-context policies, versus merely doing the bidding of their richest board members or donors at the expense of low-income countries. The unfortunate reality is that even organizations that have ostensibly embraced the credibility revolution still peddle pretty bad ideas for this exact reason.
Second, the ongoing general decline of the authority and influence of Western states — in part due to the rise of other influential powers or blocs — will undoubtedly impact development practice. There’s no denying that the financial, intellectual, and institutional hegemony of Western countries significantly shaped development practice over the last 60 years. This era had both good and bad elements. The good elements included efforts to incentivize the modernization of economic management and policymaking in low-income countries (work that’s far from finished, and which has yielded some good results); while the bad elements included the fostering of aid dependence, cyclical faddism, reflexive policy extraversion, lack of elite ambition, and implicit support for a hierarchical world order that permanently placed low-income countries at the bottom of the global totem pole. It follows that as Western countries recede from global dominance, the influence of ideas and preferred modes of development practice from the West will also decline.
Importantly, the institutionalized top-down paternalism characterized by all manner of “best practices” and lowest common denominator global compacts like SDGs and associated project-based strategies are likely to lose ground to (hopefully more ambitious) alternative approaches that emphasize transformative structural change.
II: Thinking through Foreign Policy magazine’s take on “the end of development”
Which brings us to Foreign Policy magazine’s Fall 2025 Issue.
First, ’s piece expertly distills the NGMI mentality that is baked into much of international development thinking and practice. For all the cash, research and learning, conferencing, and evolving shiny toolkits for tackling global poverty, a constant feature in the field of development is the firm belief by most of the pivotal players involved that low-income countries will always be poor and desperately in need of foreign assistance. This mentality shapes the sort of solutions that get foisted on those countries, many of which continue to be led by low-ambition leaders that eagerly accept one failing project after another. Consider the case of the SDGs:
In retrospect, the SDGs now look less like a new dawn than the final gasp of a unipolar, end-of-history fantasy. Rather than billions leveraging trillions, the track record of blended finance is dismal. It is rare to see more than cents on the dollar mobilized in private money. In key areas of innovation such as green energy and artificial intelligence, the developing world, far from catching up, is left even further behind.
Measured against the declared ambitions of the SDGs, this is disappointing. But how seriously were those visions ever intended? Did anyone in 2015 ever contemplate what a world would look like in which they were realized?
Tooze also touches on the question of strategic independence and policy autonomy in the process of development. Raising this question isn’t just a matter of expressive decolonization politics. As I’ve repeatedly argued here, the lack of ambitious and contextually smart policymaking is an important binding constraint on economic growth and development. With this in mind, what William Easterly calls “tyranny of international development expertise” is a problem whose solution lies in a radical reorientation towards knowledge production for context. Of course this doesn’t mean shutting off the rest of the world. Instead, it’s a call to reject naive claims of external validity of knowledge produced elsewhere; and deliberate investment in the domestication of all ideas regardless of the source. The nature of policymaking and implementation is that there are no off-the-shelf solutions. Learning by doing and embracing the complex technicalities and politics of implementation is the only way that works. Evidence neither makes nor implements policy. Cross-pressured people do. It follows that over-indexing on the hunt for what to do at the expense of learning how to solve problems is a losing game. Here, Japan offers the best example for low-income countries to follow.
For good or bad, elites’ ambition and intimate knowledge of their policy context often come bundled with a taste for strategic independence and policy autonomy. To be blunt, the sort of elites who aren’t ashamed to receive food aid, blithely allow foreigners access to sensitive ministries and agencies in the name of “technical assistance,” or who accept compromised buildings and electronic equipment as good faith “donations” are unlikely to have to what it takes to successfully execute long-term development strategies.
As Tooze observes, this raises tensions that cannot be simply swept under the carpet. The strategic independence that comes with development will necessarily disrupt the established hierarchy of states within the international system:
… Imagine, for instance, if Brazil were actually to become an economic and technological powerhouse like Japan. Or if Ethiopia or Nigeria reached Turkish levels of state capacity and GDP per capita.
Such scenarios evoke shoulder shrugging, partly because such futures are deemed implausible—but also because on closer inspection any such scenario is distinctly uncomfortable. The geopolitical ramifications would be incalculable. Imagine, for instance, if Mexico achieved the GDP per capita of Canada. Would that pose a disconcerting challenge for the United States? Of course it would. In the meantime, it’s easier to see that particular set of SDGs as aspirational rather than real.
… We are not in a world in which the future is mapped either in terms of universal norms or brightly colored SDG targets and cute infographics. The more primal and urgent imperative driving development both at the individual and collective level is not so much the quest for rights but the will to power—power over resources, purchasing power, the ability to resist the influence of others, to have security but also, if possible, to assert one’s own zone of control. Development in this sense is not just about ticking boxes and chasing targets; it is inherently and necessarily political and geopolitical.
In the issue’s second piece, Daniela Gabor writes about development finance — with specific attention to the pathologies of de-risking as a model of attracting private capital for development. I took away two important points from Gabor’s piece. The first point isn’t necessarily made by Gabor, and in fact contradicts some of her arguments. In my view, policymakers need to seriously rethink of the role of private finance in development. On paper, private capital ought to have incentivized fiscal discipline and prioritization of commercially viable public projects. In practice, however, the process of de-risking projects ended up blunting the force of private financiers’ profit motive. This happened because in many ways de-risking became a play to, as much as possible, guarantee high levels of risk-adjusted returns without much care for private capital’s impact on public finance management. Incentives matter. Private capital must be incentivized to discriminate against governments that have poor PFM practices; and when those governments need capital they should be forced to clean up their PFM practices.
Second, Gabor argues that the fixation on de-risking and crowding in of private capital has at once upset what I would call the “developmentalist social contract” and provided a permission structure for magical thinking regarding how to finance the developmental challenges of our time:
…. The new consensus adopted financiers’ view of development: privately owned, for-profit projects with returns improved—in financiers’ jargon, “de-risked”—by public subsidies and favorable regulations. A new hospital or housing complex becomes investible once financiers such as BlackRock or Blackstone get concessional loans from the World Bank and local fiscal resources to guarantee a certain risk-adjusted return. The same investment demands apply to renewables, education, water, highways, or carbon and biodiversity credits.
…Financiers, touted as the new development partners, were in fact draining the global south rather than investing there. External debt distress loomed large, with debt-servicing costs for developing countries reaching an all-time high of $1.4 trillion in 2023. Countries that were promised trillions in private investment were instead paying trillions in debt service to private creditors, often redirected from public spending on health and education.
These are valid critiques. Furthermore, and as Gabor has argued elsewhere, the logics of de-risking presents important challenges. First, as a strategy for raising capital, de-risking often has the net effect of constraining states’ ability to discipline capital in pursuit of long-term developmental objectives (with implications for both the types and pace of investments in much-needed public goods). Second, de-risking may lead to unnecessarily privatization/financialization public infrastructure at the expense of being able to provide pro-growth public goods.
The following piece by David Engerman discusses the quest for south-south cooperation:
What does this not-so-ancient history suggest about the future of south-south cooperation as we enter the second quarter of the 21st century? If historical patterns hold, renewed excitement about south-south cooperation in the 2020s is an important signal—a signal of distress.
Even as many once poor nations have graduated (at least in the World Bank’s reckoning) into lower-middle-income status, there are plenty of reasons for pessimism. Long before the gutting of USAID, international development was in crisis. Progress toward the Millennium Development Goals swooned in the 2010s until they were replaced in 2015 by the Sustainable Development Goals, or SDGs, a set of concepts so broad that they can’t be contained on a single webpage. Recent indicators give little reason to hope that the SDGs will surpass the record of their predecessors. The 2025 SDG progress report estimates that about 10 percent of the world’s population now lives in extreme poverty, a number not forecast to shrink significantly in the next five years. Dreams of a “world without poverty” by 2030 seem all the more unattainable today.
The piece provides a concise historical account of the failures of south-south cooperation. As I read it, though, I couldn’t help but think of the inherent difficulties of organizing weak states. In the international system, power is power. Which is to say that effective south-south cooperation will only come about when there is a critical mass of Global South countries that have the economic and military heft to project power on the global stage, while also coordinating action among themselves (which may involve coercing some of their own members to behave in certain ways). Talk of solidarity is cheap. So is the expressive politics of reforming global institutions. The fact of the matter is that Global South cooperation will only work with the correct mix of carrots (tangible benefits) and sticks (coercive incentives to stick to commitments).
Switching away from states, Suparna Chaudhry’s piece describes the decline of NGOs under the twin challenges of decline in funding and regulatory squeeze from governments in a context of “global democratic recession and authoritarian resurgence” (Writing in Foreign Affairs, Sarah Bush and Jennifer Hadden makes more or less similar arguments.)
I have a slightly different, if complementary, take. Autocracy and less cash aren’t the only big problems facing NGOs. From the perspective of many developing countries, the biggest problems are that the perversive NGOization of development practice has not delivered results, while at the same time significantly contributing to the erosion of state capacity. Stated differently, substituting for the state creates terrible incentives for all involved and doesn’t really generate good results. Proliferation of NGOs leads to lots of inefficient projects and the atrophy of stateness. Both make it harder to achieve tangible results for ordinary people. It is no wonder that recent surveys find that people hold businesses in higher esteem than NGOs:
Public trust in NGOs has suffered as a result. In 25 years of Edelman Trust Barometer polling across 28 countries, 2021 was the first year that respondents reported that they had more trust in businesses than in NGOs. In 2025, businesses were seen as nearly as ethical as NGOs and far more competent.
As tempting as it is to view the decline of NGOs as purely about budgets and regime types, it is also worth considering that accumulated failures over the last three decades have left NGOs politically vulnerable in many of the places they operate. A sector that was supposed to be the stop gap against limits of stateness ended up usurping a significant share of state functions, but without the capacity to effect structural change. This, of course, is not ideal. Real people who depend on help delivered via NGOs stand to suffer. At the same time, one cannot hide from the fact that the excessive NGOization of development was not wise; and that it is high time we brought the state back in the in the delivery of essential public goods and services.
In the fourth piece in the issue, Henry Tugendhat asks whether China can replace USAID funding in low-income countries. The simple answer is no. China plays on a completely different plane when it comes to development assistance/partnership. Tugendhat then describes the central role of trade finance in China’s strategic play in the developing world (with implications for low-income countries’ ability to start climbing the manufacturing/export ladder, instead of finding themselves forced to import Chinese manufactures):
Instead of aid, Beijing began to prioritize the trade finance that has dominated Chinese engagements ever since. This prioritization of trade finance occurred soon after the development of coastal manufacturing in the 1980s and early 1990s. Ever since its establishment in 1994, the Export-Import Bank of China has issued more loans than any other Chinese bank to foreign buyers of Chinese goods and services. These loans could cover infrastructure, vehicles, telecommunications equipment, and much more.
In the penultimate piece, provides reflections on Albert O. Hirschman’s resurgent relevance in the field of development (I highly recommend the Hirschman bios here and here):
The history of development economics, since its inception, has been one of fads and intellectual bubbles….
The terms used to describe the poorer countries of the world have also changed, from the Third World to emerging markets to the global south. But the faith among development economists that One Economics Recipe Will Rule Them All has persisted.
….Hirschman was a big believer in eclecticism in development projects—an idea that resonates with recent social science trends acknowledging the role of complexity. Is it time for a Hirschmanesque approach to economic development? There are reasons to be optimistic —and also reasons to be skeptical.
I mostly agree with Drezner that there is a lot that contemporary development experts could learn from Hirschman’s career. In particular, Hirschman’s healthy respect for contextual immersion and ability to be comfortable with imbalance and contradictions in the process of development. Too often development experts pretend to be in a world where we can move dials on a dashboard and precisely calibrate context-agnostic interventions; when in reality development practice is the business of building a car having already started a long roadtrip and accepting that the best way to get the job done is through learning by doing.
Finally, Ndidi Okonkwo Nwuneli writes about the potential for African states to take the initiative in directing their own developmental futures (via both domestic reforms and a more assertive engagement with external actors on finance, critical minerals, and trade more broadly):
The G-20 has a critical role to play in tackling the cost-of-capital issue in particular, as many of the structural drivers of high capital costs are embedded in international financial norms that no single country can change alone. G-20 leaders must commit to an implementation road map that lowers the cost of capital for African and other emerging markets. A credible road map should emerge from the G-20 summit in November that includes (1) improving debt data and transparency, (2) reforming credit rating agency methodologies to better reflect actual risk, and (3) instituting domestic policy measures that de-risk investments. Expanding the use of innovative financing mechanisms by multilateral lenders, along with better targeting of concessional finance, should also be prioritized. Together, these steps are essential for leveling the playing field for countries with strong development potential but limited fiscal space.
Nwuneli’s piece encapsulates the importance of strategic independence and policy autonomy — both sorely lacking on the Continent — in the process of development. For example, it’s deeply puzzling (and frustrating) how little African governments appear to understand the current geopolitical moment. Whether they are talking about reforming global institutions, the global financial architecture, or critical minerals supply chains, most official thinking in the region is still stuck in the past. Too often there is a ready acceptance that the region’s states can only be rule takers who are forever doomed to appeal to the better angels in others if they are to improve their lot.
Notice that this is not for lack of good ideas. There are lots of smart people in the region who have thought seriously about these issues, but who do not seem to break through to the people who ultimately make policy. It’s hard not to conclude that there is something about the type of leaders across the Continent that makes them a poor fit for the current moment.
III: Conclusion
As I recently pointed out in the World Bank’s Afronomics podcast with Andrew Debalen, the consequences of complacency have long lags. The mistakes of today will haunt the region for decades to come. Along the same lines, many contemporary African states are paying for failures at state/nation-building and myriad other policy mistakes in the first three decades of independence.
At times getting out of this jam can seem impossible — and many have effectively given up, opting to focus on palliative rather than transformative interventions. Yet I remain optimistic that with the right amount of historical self-awareness, strategic independence, and policy autonomy African policymakers can begin to turn the tide. The point here is that the nature of the problem is such that it can’t be solved by elites whose highest ambition is to be donor darlings or two-bit rent seekers.
Again, this is not a case for shutting off the world. If anything, it ought to be clear to African policymakers that the best path to rapid development passes through integration into the world economy and a liberal openness to learning from others. The utility of strategic independence and policy autonomy is that they increase the likelihood of countries being able to do both things on their own terms, while also protecting their economies (especially labor) from the negative effects of being integrated into the global economy.
To be clear, having strategic independence and policy autonomy doesn’t necessarily guarantee success. Otherwise, Eritrea would be a shining economic miracle on the Red Sea. The claim here is that insisting on these attributes selects for the types of leaders that are historically self-aware and ambitious enough to dare taking on tough policy paths (even against opposition from the “best practice” police) that increase the chances of economic success. The obverse is also true. Leaders lacking in strategic independence and who are uninterested in policy autonomy are more likely to lock in policy failures for extended periods — principally by reproducing systems that select for low-ambition elites.
Interesting commentary and your valuation of a way forward sounds good.