The debate about the role of aid in development is a long way from being settled, and Peter Gill's new book, Famine and Foreigners: Ethiopia Since Live Aid, will not be the final word. It's still an essential read. Gill presents detailed reports of what he has seen and heard in the country, and what people ranging from the country's leader Meles Zenawi to villagers living every day in hunger have told him. His question in this book: 25 years on from the famine of 1984 – the one that made the average westerner aware of Ethiopia – was hunger history?

The answer is 'no'. And is was so clearly negative that much of Gill's research for this book formed an exploration of the causes of that failure.

The role of NGOs is one of the causes he explores. Gill is not an outright critic of the aid business. A review of this book by David Rieff had led me to expect much more overt criticism of the counter-productive effects of foreign money and agencies. Equally, he is no fan of the actions of many of the external donors and agencies, and describes the compromises they decided to make with the authorities and their opponents in order to get supplies to the hungry villages. On the other hand – and I think I'm now on my third hand – he is clear-eyed about the responsibility of the government for continuing poor harvests and hunger. Meles Zenawi emerges from this book as an intriguing character. It's not clear what Gill thinks about him – it seems to be a mixture of admiration for Meles' early achievements and firm criticism of his later authoritarianism. Meles seems to be, like Rwanda's Paul Kagame, an ambivalent figure.

The key reason for concern about the Ethiopian government's role is its increasing intolerance of dissent. Gill presents one of the most thoughtful discussions I've come across of the modern politics of the aid business. Western governments and NGOs have increasingly insisted on 'good governance' and democratisation as a condition of assistance, but this conditionality takes them to the heart of the politics of the recipient countries. The debate about the politicisation of aid is at the heart of this excellent account. Gill focuses on Oxfam, making use of its own self-evaluations and interviews with former and current staff members. He writes: “It was the campaigning role of the charities within developing countries which began to court controversy, and it was the Ethiopian authorities which offered serious resistance.” (p182) One has sympathy with an intelligent and sophisticated African leader who declines to be lectured about 'governance' by young westerners with one eye on the increasing corporate success of their multi-million pound organisation. In an interview with Gill, Meles says:

“These NGOs were initially seen as an antidote to what was said to be the main problem in Africa – the bloated state. .. You reduce the role of the state, including your social services, and you encourage NGOs to provide as much of the public services as possible. In the end we argue that the NGOs have turned out to be alternative networks of patronage.” (p191)

An argument which might give us pause in the context of our own domestic political debate at the moment. One chapter of the book looks with some sympathy at the role Chinese investors are playing now in Ethiopia, with their focus on getting the roads built rather than lecturing the government about the country's internal politics.

On the other hand, one has no sympathy with the same leader when he starts to imprison and harass political opponents on the grounds that freedom is a luxury inappropriate to a developing country. Linda Polman's recent book War Games debates some of these same issues – she too is a journalist confronting the issues with the experience of many years' reporting in Africa. She is more overtly critical of western agencies; Gill sees more complexity.

There are other important themes in the book. One is the importance of demography, little discussed these days. Ethiopia's food problem is in large part a problem of keeping supplies growing in line with an exploding population. The total doubled to about 80 million in the 25 years after the 1984 famine, and is predicted to double again in the next 25 years. Large families, especially in polygamous families, remain the norm. It's almost impossible to imagine agricultural productivity improvements that could keep up, short of a profound technological step. But since the domestic moral values of George W Bush diverted the aid business from population control, the issue has been ignored. Funding for family planning in sub-Saharan Africa would cost an estimated $400m a year or so – compared to the $16bn being spent on HIV/AIDS. It's not that the latter is unimportant, but can this be the right balance?

In sum, this is an important and essential book for both its witness to the shape of Ethiopia now, and for its contribution to the development debate. This debate was ever a polemical one, although the opposing positions have shifted over the years. Peter Gill is to be congratulated for addressing the issues with the care and detail they deserve.