Rule of law, adjudicated by even-handed justice, simply does not exist anywhere in the developing world and this is the real culprit that stifles development and condemns the poor to live in zero-sum societies. All developing countries are failed states to one degree or another and most of their citizens are miserably poor. In fact, calling them "developing" is misleading because it suggests an upward spiral. But these people are the great grandkids of folks who were poor a half century ago when we started giving out foreign aid in large chunks.
Without laws -- and the institutions to administer them fairly -- people make up their own rules. Society requires predictability to function and so absent national law they create informal rule-sets. But rules without the force of law can only be sanctioned through bribery or physical force. If the beat cop has no rules, he follows the local norms, the neighborhood rule-set. But to use his monopoly of force on behalf of the neighborhood rule-set he will extract a price. A bribe.
When that happens, the law comes to mean corruption. And since this system is not just accepted but actively reinforced by a network of beneficiaries, corruption becomes the organizing principle of society. At that point, demands by aid donors that governments control corruption are not just impossible to meet, but could even be dangerous and destabilizing for recipient governments and so are largely ignored.
Peter F. Schaefer sounds like a decent guy, and details his extensive knowledge of corruption
in the Third World. It's not a very optimistic look, because he sees corruption as being too deeply entrenched in these cultures to stop. His only advice is for aid donor nations to take a harder line on this corruption and freeze the ill-gotten plunder as soon as it reaches the Western banking system. Good luck on that -- and even if it could be implemented it would do nothing to stop the low level corruption the people in these countries endure every day.
What these countries really need is a fair legal system and civil protection, coupled with a smaller, less intrusive government. The problem is that most of these countries model themselves on Western governments, with our big sprawling bureaucracies. This is not as much of a problem in the West, because our bureaucracies are, for the most part, not corrupt. But it's disastrous in countries where the ruling principle is, "What's in it for me?"
I read an interesting article in the Economist a while ago, and it described the efforts a reporter had to make to visit a train station in some God-forsaken country in Africa. He had to get numerous authorizations and pass through many check points -- each autorization and checkpoint requiring a bribe. When he finally got to his destination, he found the building and all the trains deserted, and looted of everything that was not too heavy to carry.
What happens is, the rulers of these countries sell portions of their power to underlings, who further divide up and sell their powers to others, who resell it again and so on -- creating a vast tentacled network of suckers, each using their tiny portion of the power of the state to feed on the public.
But imagine an occupying Imperial force, free from the stifling PC conventions of the day, occupying a country like this, cutting off the leeching network at its source, and providing security and a system for resolving disputes. Wouldn't everything be perfect from then on? No, of course not. But it would be a start, and allow the stability and safety people need to improve their lives. And it would be much better than the hopeless situation that stands today.
Unfortunately, I think the political climate in the world is a just a little unready for this kind of thinking. Better to just support whatever's the latest fashionable idea for saving the Third World -- what was it again? Oh right, debt forgiveness. That'll work, for sure.