Africa: Is Aid an Answer?
AbstractWe address the poverty trap rationale for aid to Africa. We calibrate models that embody typical explanations for stagnation: coordination failures, ineffective mix of occupational choices and imperfect capital markets, and insufficient human capital accumulation coupled with high fertility. Calibration is ideally suited for this evaluation given the paucity of high-quality data, the high degree of model nonlinearity, and the need for conducting counterfactual policy experiments. We find that calibrations that yield multiple equilibria -- one being prosperity and the other stagnation -- are not particularly robust in capturing the African situation. This tempers optimism about foreign aid typically prescribed based on models of multiplicity. Moreover, conditional on multiplicity, the calibrated models indicate that the cost of policy interventions needed to trigger development in stagnant economies is small. The lack of reforms in Africa, despite the low estimated costs, suggests political hurdles to reform. It is not clear that foreign aid would be able to circumvent these. Taken together, we conclude that the case for foreign aid to Africa is weak.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.
Volume (Year): 8 (2008)
Issue (Month): 1 (December)
Contact details of provider:
Web page: http://www.degruyter.com
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Keith Blackburn & Gonzalo F. Forgues-Puccio, 2011.
"Foreign Aid - a Fillip for Development or a Fuel for Corruption?,"
CDMA Working Paper Series
201107, Centre for Dynamic Macroeconomic Analysis.
- Keith Blackburn & Gonzalo F. Forgues-Puccio, 2011. "Foreign aid - a fillip for development or a fuel for corruption?," Centre for Growth and Business Cycle Research Discussion Paper Series 158, Economics, The Univeristy of Manchester.
- Keith Blackburn & Gonzalo F. Forgues-Puccio, 2011. "Foreign Aid – A Fillip for Development or a Fuel for Corruption?," Development Research Working Paper Series 09/2011, Institute for Advanced Development Studies.
- Chris Papageorgiou & Fidel Pérez Sebastián & Shankha Chakraborty, 2010.
"Diseases, infection dynamics and development,"
Working Papers. Serie AD
2010-28, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Elisabeth Caucutt & Krishna B. Kumar, 2007. "Education For All: A Welfare-Improving Course for Africa?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(2), pages 294-326, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.