After any catastrophe in the Third World (war, flood, famine, earthquake), convoys of glittering new Land Cruisers hasten to the scene in clouds of dust, laden with fat, clean, lavishly paid agents of the United Nations, World Bank and assorted NGOs. Images of these angels of mercy distributing sacks of maize labelled “gift of the people of the United States”, or Britain, or whoever, induce a complacent glow in the television-news audiences of rich nations. We are doing our bit. Our cheques to charities are not in vain. We succour the afflicted. Unfortunately, however, a huge amount of aid is the wrong sort. Years ago, after a tidal wave swept Bangladesh, I remember watching relief planes dropping powdered milk to areas bereft of uncontaminated water. Foreigners who impose their own reconstruction solutions usually get these wrong. Donor countries often fund projects tailored to suit their own economic interests, not those of the recipients.

Ashraf Ghani is a former Afghan finance minister who aspired to the UN Secretary-Generalship. Clare Lockhart has worked at both the World Bank and UN, and possesses extensive experience of Afghanistan. Together they now run the Institute for State Effectiveness. Their mission is to show the rich world how best to help the world's failing and failed states. They reckon there are some 40 to 60 of these, inhabited by almost two billion people. These are nations that have fallen victim to what they call “the sovereignty gap”. Trapped in poverty and misgovernment, they are excluded from the great surge of wealth-generation that has accompanied globalisation.

No society, say the authors, need be condemned to its fate merely by circumstance. In the 1950s, the Philippines and Burma were perceived as frontrunners for economic success, while Taiwan and South Korea were basket cases. Today, the former states are beggared by misgovernment, while the latter prosper mightily. Singapore and Ireland, possessed of few natural advantages, boom on the back of inspired management. The southern United States, which half a century ago was abysmally backward, now thrives because the right decisions and commitments have made it so.

At the heart of Ghani and Lockhart's argument is a call for local people to be allowed to promote and manage local projects. Food aid is far less helpful than giving people the chance to earn money to buy their own, by providing them with work. The provision of technical assistance to developing nations has become a highly profitable activity for western companies. Yet it is pernicious to entrust reconstruction management to well-paid foreigners and their staff. In Afghanistan, 280,000 civil servants earn $50 a month, while locals contracted to foreign NGOs make $1,000 a month. Against this background, how can the country develop its own effective machinery of government? A ring road to link Herat, Mazar, Kabul and Kandahar was agreed five years ago. Yet today it remains incomplete, because the funding nations split the project into segments, each operating to different standards, under separate foreign managements.

Nurturing local leadership is vital. The World Bank favours primary schooling at the expense of higher education, but Ghani and Lockhart reckon universities deserve much higher priority. It is critical to create disciplined financial management of both aid and national budgets. The authors say that no audit of any kind has taken place of the hundreds of millions spent by UN agencies in Afghanistan since 2002, most of them wasted.

Everything that this book advocates makes sense. Its limitations lie in its chasms, all the things unsaid. It is impossible convincingly to diagnose failing states, without addressing their ghastly leaderships. The authors describe programmes introduced by the Afghan government since 2002, and justly applaud the country's 2004 elections. But they say not a word about the Karzai administration's descent into corruption and ineffectiveness, a dominant feature of Afghanistan's story in the past two years. Financial and bureaucratic structures can achieve results only where there are sufficient educated and honest people to make them do so. Why does Botswana work whereas Zimbabwe does not? Both possess large natural resources. But Botswana is that rare thing, a relatively honestly ruled African state, while Zimbabwe is a murderous kleptocracy. Even Kenya, once a shining example, is today threatened by the suicidal greed of its rulers. Paul Collier, in his superb 2007 book The Bottom Billion, frankly avowed the fact that most failed states are ruled by criminals who cannot be dispossessed because they control armies, which confer a monopoly of institutionalised violence.

Ghani and Lockhart ignore this problem. Even allowing for the usual excesses of academic-speak, their prose is hard going. “Once actors reach consensus on a contextualised state-building strategy,” they say, “they must focus on finding realistic and innovative delivery mechanisms that create a steady momentum towards the goal of a functioning state.” They mean, I think: “It is not enough to have ideas and draw up plans. Somebody must make these work.” Why not say that? Yet the book's emphasis on the importance of nurturing local players and institutions, rather than imposing them from abroad, must be right. The British made a success of the old colonial model of government by committing officials who spent years amid the societies they ruled. Today, when foreign-aid workers are parachuted into an area for mere months, colonial-style fixes fail. Rory Stewart vividly chronicled the difficulties of trying to govern an Iraqi city in his 2006 book Occupational Hazards. It takes decades to create the democratic infrastructure that alone can ensure accountability.

It seems a pity that Ghani and Lockhart have not drawn on their extensive experience to write more explicitly about Afghanistan. Today, we see that mere tactical military successes against the Taliban mean little when the development of government and reconstruction is getting nowhere. Yet unless Nato's soldiers fight, the Taliban seem bound to regain control of the country by force of arms. Until the West can develop a coherent strategy that links military, political and economic assistance to failed states, its interventions will continue to fail. Ghani and Lockhart believe that the wealth now available to the world offers a unprecedented opportunity to save the poorest nations. Yet they do not explain what can be done about such countries as Burma and Zimbabwe, where wicked rulers frustrate every attempt to help.

The authors say some sensible things about failed states, but suggest no formula for saving them from leaders who perceive their own peoples merely as chickens for plucking. It will remain impossible to achieve the outcome promised by the book's title until we can solve that issue.

Fixing Failed States by Ashraf Ghani and Clare Lockhart
OUP £13.99 pp292 Buy the book at Books First £12.59 including free delivery

The blame game
Ashraf Ghani, pictured, knows all about failed states, having been the Afghan finance minister under Hamid Karzai between 2002 and 2004. His dramatic reforms - including a new currency - seemed briefly to have stabilised the country, but Ghani (who was passed over as UN secretary-general in 2006 and World Bank president in 2007) is now highly critical of the plunging record of the Karzai regime. “The approach of the past seven years has backfired,” he said recently. “Hundreds of millions of dollars have gone into technical assistance, only to increase corruption and misgoverance.” Comments such as these have fuelled speculation that he might oppose Karzai in next year's presidential elections. Significantly, perhaps, the current Afghan president is barely mentioned in Ghani's book.

Times Recommends

• Superfreakonomics by Steven D Levitt and Stephen J Dubner
• The Times picks the 50 best paperbacks of 2009
• Vincent van Gogh’s letters show the soul of the artist