I currently work for an African government, so I've got a slightly different perspective hopefully to offer. People in power here actually complain that too much aid money is being put into the social sector (health, education etc) and not nearly enough into economic development.
I don't agree, not here anyway, but then I don't really believe that aid is that influential in driving economic development. But there's a reason why people think in economic terms. When you look at places around the world that have really raised living standards, they have done it largely through economic means, either solely through government (Soviet Union) or through some combination of capitalism and effective government (UK, US, Germany, Japan, China etc) and also through their own initiative, often against the odds. This has often meant capitalist development, but can you blame people, when they see the living standards in the UK or Scandinavia?
Ironically, developed countries often have much better environments than poor countries (if you saw the slash and burn agriculture prevalent here, or the chopping down of trees for firewood you would be appalled). But it's while the industrial transformation is going on that the real problems are.
Also, ironically, elites in many countries don't have the incentives to drive national development, as they're quite happy being personally rich in public squalor, overseeing natural resource rents and stealing aid money. The process by which broader development occurs is still not particularly well understood but it's surprisingly difficult given underlying political and social constraints as well as barriers but up by countries ahead of the game.
The worst situation is economic stagnation and environmental degradation. But there's nothing guaranteeing that a society will develop along any lines, let alone reasonably humane and environmentally conscious ones.
Meanwhile the countries that have 'succeeded' in the development game are completely dependent on exports for growth - creating a hideously inefficient and environmentally destructive international system where goods that could quite easily be made locally are ferried around the world - and as markets liberalise further in the next few years this trend is set to increase.
All countries that have got rich have been dependent on exports for a while, for the simple reason that that's where the markets are. Although you seem to need a decent, well managed period of import protection and trade barriers along the way. It was true in the 19th century and it's true now. As countries get richer there internal markets develop more and they become less dependent on exports. You're right that it is a risk, but development as typically practiced is risky.