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Impacts of Foreign Aid to Melanesia

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  • Simon Feeny

Abstract

This paper investigates aid effectiveness in Melanesia, a region consisting of Fiji, Papua New Guinea, the Solomon Islands, Vanuatu and New Caledonia. These countries are of great interest since they have not performed well despite being rich in resources and receiving large amounts of foreign aid. The paper examines the impact of foreign aid on agricultural growth and overall economic growth in Melanesia. The impact on agricultural growth is important since the majority of people in Melanesia live in rural areas, reliant on agriculture for their livelihoods. Using the econometric analysis of data for the period 1980 to 2001, results provide no evidence that foreign aid has impacted on the agricultural sector. However, the paper does find evidence that foreign aid has impacted favourably on economic growth. A number of explanations and policy recommendations are provided.

Suggested Citation

  • Simon Feeny, 2007. "Impacts of Foreign Aid to Melanesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 12(1), pages 34-60.
    • Handle: RePEc:taf:rjapxx:v:12:y:2007:i:1:p:34-60
    DOI: 10.1080/13547860601083603
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    References listed on IDEAS

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    1. Mr. Tito Cordella & Mr. Giovanni Dell'Ariccia, 2003. "Budget Support Versus Project Aid," IMF Working Papers 2003/088, International Monetary Fund.
    2. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
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    Cited by:

    1. Lisa Chauvet & Paul Collier & Anke Hoeffler, 2010. "Paradise Lost: The Costs of State Failure in the Pacific," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 961-980.
    2. Nuruddeen USMAN & Martins.O. APINRAN, 2019. "The Impact of Aid and Macroeconomic Policy on Growth in Nigeria: A Bounds Testing Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(5), pages 581-603, May.
    3. Patrick Guillaumont & Catherine Korachais & Julie Subervie, 2008. "Growth Oriented Macroeconomic Policies for Small Islands Economies: Lessons from Singapore," WIDER Working Paper Series RP2008-47, World Institute for Development Economic Research (UNU-WIDER).
    4. Md Ismail Hossain & Md Istiak Hossain & Mollah Aminul Islam & Md Reza Sultanuzzaman, 2022. "Does Foreign Aid Have an Expected Role in the Economic Growth of Bangladesh? An Analysis in ARDL Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 12(6), pages 113-126, November.
    5. Henrik Hansen & Derek Headey, 2010. "The Short-Run Macroeconomic Impact of Foreign Aid to Small States: An Agnostic Time Series Analysis," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 877-896.
    6. Matthew Clarke, 2011. "Innovative Delivery Mechanisms for Increased Aid Budgets: Lessons from a New Australian Aid Partnership," WIDER Working Paper Series wp-2011-073, World Institute for Development Economic Research (UNU-WIDER).
    7. Feeny, Simon & Iamsiraroj, Sasi & McGillivray, Mark, 2014. "Growth and Foreign Direct Investment in the Pacific Island countries," Economic Modelling, Elsevier, vol. 37(C), pages 332-339.

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