ABSTRACT
A major aim of the 'seventies was to reduce income inequalities in developing countries by "targeting" aid to poorer members of society. Research suggested this could be done through projects covering specific rural areas that emphasized the participation of the poor in all aspects of project activities. Donors were also clearly wrong in the 'seventies in failing to emphasize the importance of proper macroeconomic policies. Economists have debated the relative merits of import substitution and export promotion as major themes in a country's development strategy. For the time being, proponents of export promotion appear to be winning the debate, and their philosophy is becoming a major tenet of World Bank policy. Institutional development has become almost as popular as policy dialogue in discussions about needed new initiatives among western donors. Most donor organizations are required by charter to terminate aid once countries "graduate" into that nebulous part of the developing country hierarchy called advanced or emerging.
