While international institutions date as far back as the 19th century, it was only after the Second World War when institutional institutionalization began to develop at an unprecedented pace.
What matter most in the failing or succeeding of a nation is the institution, more precisely the political institutions that determine economic institutions (Michele Boldrin).
Acemoglu and Robinson (writers of the famous book why nations fail) theorize that political institutions can be divided into two kinds: * “Extractive” institutions in which a “small” group of individuals do their best to exploit - in the sense of Marx - the rest of the population * “Inclusive” institutions in which “many” people are included in the process of governing hence the exploitation process is either attenuated or absent.
One if the interesting comparison between the two institutions is the following:
“Extractive institutions try to seize a larger share of the pie for some groups in society, at the expense of making the pie larger. Inclusive institutions prefer to see the size of the pie grow, in the interests of the majority, even if it means disruptive change for the privileged few with a valuable stake in the status quo.” (big sky ideas, 2012)
The reason that Nogales, Arizona, is much richer than Nogales, Sonora, is simple; it is because of the very different institutions on the two sides of the border, which create very different incentives for the inhabitants of Nogales, Arizona, versus Nogales, Sonora. The United States is also far richer today than either Mexico or Peru because of the way its institutions, both economic and political, shape the incentives of businesses, individuals, and politicians.
They argue that for any economic success political institutions must be sufficiently centralized to provide basic public services including justice, the enforcement of contracts, and education. Given that these functions are carried out, inclusive institutions enable innovative energies to emerge and lead to continuing growth as exemplified by the Industrial Revolution. Extractive institutions can also deliver growth but only when the economy is distant from the technological frontier. These extractive institutions will ultimately fail, however, when innovations and “creative destruction” are needed to push the frontier. Hence, while success may be possible for a while under extractive institutions continuing success is possible only under inclusive institutions.
Institutions matter a great deal in determining the level of economic development of a country, Institutions determine the costs of economic transactions, it determine the degree of probability of return to investment, institutions determine the degree to which the environment is conducive to cooperation and increased social capital. High quality institutions today are rooted in greater equality, Institutions strongly affect the economic development of countries and act in society at all levels by determining the frameworks in which economic exchange occurs. They determine the volume of interactions available, the benefits from economic exchange and the form which they can take.
Economic institutions not only determine the aggregate economic growth potential of the economy, but also an array of economic outcomes, including the distribution of resources in the future.

What is the relationship between foreign aid, the emergence of democracy and development, in post conflict societies??
Many foreign aid donors include the promotion of democratic government as a major goal of their aid programs. The U.S. agency for international Development (USAID) alone spends more than $700 million annually on democracy-related programs, including elections support, the strengthening of parliaments, judiciaries and political parties, and fostering the growth and power of civil society organizations (such as labor unions and women’s and human right groups) (knack, september 2000)
Democratizing states that receive high levels of democracy assistance are less likely to experience civil conflict than countries that receive little or no external democracy assistance. Democracy aid decreases the risk of conflict by reducing commitment problems and uncertainty. (Burcu Savun)
However, it is upon these very post-conflict countries, from Bosnia to Rwanda that much of the world’s attention has been focused, and aid has been used specifically and explicitly to promote democracy and stability. Indeed, some literature suggests that foreign aid in post-conflict societies should be a far more effective tool than in developing countries generally (John Ishiyama, 2007-2008) . Indeed, Collier and Hoeffler assert that they are more responsive to the development assistance provided by affluent countries. “Aid is considerably more effective in augmenting growth in post-conflict situations than in other situations…aid volumes should be approximately double those in other situations” .Not only do Collier and Hoeffler contend that aid leads to economic growth in post-conflict societies, but also that political stability and democracy will result (Collier, 2002)

Poverty and inequality in Lebanon: Lebanon, an Eastern Mediterranean country, with a population of 4,140,289 (according to the latest studies) is an example of a post-colonial developing nation. Lebanese modern history has witnessed one violent civil war, two foreign invasions, and many internal clashes.
According to the Living Conditions Index, 32.1 percent of households or 35.2 percent of the Lebanese population live below the satisfaction threshold. These are divided between households having a very low degree of satisfaction, including 7.1 percent of households (6.8 percent of individuals), and those having a low degree of satisfaction, including 25 percent of households (28.4 percent of individuals). Households having intermediate satisfaction represent the largest component, with 41.6 percent of households (42.2 percent of individuals), while households having a high degree of satisfaction account for 26.4 percent of the total (22.3 percent of individuals). (http://www.undp.org.lb/programme/pro-poor/poverty/povertyinlebanon/)

Statistics has revealed that the bulk of poverty is concentrated in four areas across Lebanon: Tripoli, Akkar, Minieh-Dennieh, Jezzine, Saida, and Hermel, Baalbek. These regions account for half of the entire poor population while only contributing to one third of the population.
Geographic distribution of poverty is also an issue of concern, as substantial disparities have been identified as existing between the peripheral and central regions of the country. Poverty rates are comparatively insignificant in the capital, with Beirut below 6 percent, while the North constitutes 53 percent of overall poverty, the Bekaa 29 percent, the South 22 percent and 20 percent poverty rates in Nabatieh and Mouth Lebanon.
According to the study, poverty impacts some vocations more than others. The poor are concentrated among the unemployed and skilled workers, in sectors such as agriculture and construction. Findings suggest that youth with a university degree are also struggling to break the poverty cycle, as the unemployment rate for non-poor university graduates holding a secondary degree is half of the rate for extremely poor university graduates.
The statistics highlights the inequality distribution of expenditure among the population, with the poorer 20 percent of the population accounting for only 7 percent of all consumption in Lebanon while the richest 20 percent accounting for 43 percent. Expenditure levels in the northern districts are alarmingly far below the poverty line. Studies showed that households in the north with a similar set of characteristics to households in Beirut are four times more likely to be poor. The northern regions have experienced the most significant decline in expenditure over the last 10 years, while Beirut, the South and Bekaa regions recorded improvements in their expenditure.
It also found that it would cost $12 per Lebanese person per annum to lift all poor individuals out of extreme poverty.

International institutions helping Lebanon:
Even thought the many clashes Lebanon has faced, international institutions and developed countries were always ready to offer help.
The International Bank for Reconstruction and Development (generally known as “The World Bank”) was established in 1945. It is an international organization affiliated with the United Nations. The World Bank is the world’s premier development lending institution. Lebanon joined it on April 14, 1947. Over the years, Lebanon has received over $980 million in World Bank loans (UN system lebanon ).
During the September 2006 Annual Meetings, the World Bank’s Board of Governors approved a grant of US$70 million for a Trust Fund to support the Government’s reconstruction efforts following the July-August 2006 Israeli war on Lebanon. The money came from the Bank’s surplus, without adding to the country’s debt burden.
At the request of the Government, the World Bank carried out an Economic and Social Impact Assessment, which provided important inputs for the Government’s Reconstruction and Reform Program that was unveiled at the Paris III conference of the Donor Community.
Also at Paris III, the World Bank pledged up to US$700 million over the next three years to support the Government’s plan.
We can also site these different active projects by the UN in Lebanon:
Education Development Project (US$44.5 million). This Project is designed to support the Government's efforts to enhance the capacity of the Ministry of Education and Higher Education to function as an effective manager of the education sector and to restore the credibility of the Public Education System.
First Municipal Infrastructure Project (US$80.0 million). This Project aims at addressing urgent municipal works while setting the stage for the gradual assumption of responsibility for municipal services at the local level.
Ba’albeck Water and Wastewater Project (US$43.5 million). The major development objectives of the Project include: improving the access of satisfactory water supply and wastewater services to the region’s residents; introducing appropriate sector reforms – particularly the development and strengthening of the capacity of the existing Baalbeck Hermel Water and Irrigation Authority and, once it is established, the Bekaa Regional Water Authority; involving the private sector in the operation and maintenance of water and wastewater facilities; and rationalizing the use of water through the introduction of water meters.
Urban Transport Development Project (US$65.0 million). The Project’s objectives are to provide the city of Beirut and the Greater Beirut Area with the basic institutional framework that is currently lacking, and to support critical investments needed to maximize the efficiency of existing urban transport infrastructure.
Cultural Heritage and Tourism Development Project (US$31.5 million). The Project will finance site conservation, enhancement investments and associated urban infrastructure improvements in selected sites, and provide technical assistance to strengthen the capacity of the Directorate General of Antiquities, Ministry of Tourism, and targeted municipalities in cultural heritage preservation and tourism development (UN system lebanon )
…..And many other projects.
Since the end of its civil war, foreign aid to Lebanon has been considered an important elemet of postwar reconstruction. This aid went from reconstruction needs towards financial stability and balance of payments equilibrium needs.
This shift proved beneficial to macroeconomic stability in Lebanon, as it allowed the government to: * Avoid financial ad currency crises in 2002 * To intervene in the foreign exchange market * Maintained balance of payments surpluses during this period * Reduce interest rate on public debt instruments * Provided the necessary liquidity and provided the necessary liquidity and ‘confidence’ for local commercial banks to continue lending and foreigners to invest.

Despite stability, negative effects included: * Diverted funds from reconstruction * An increased dependency on the foreign aid (Eldis) Definitely, Lebanon shouldn’t be left alone, and is in need for developed countries or international institutions for finding a new development path.