A Primer on Foreign Aid
AbstractControversies about aid effectiveness go back decades. Some experts charge that aid has enlarged government bureaucracies, perpetuated bad governments, enriched the elite in poor countries, or just been wasted. Others argue that although aid has sometimes failed, it has supported poverty reduction and growth in some countries and prevented worse performance in others. This new working paper by CGD senior fellow Steve Radelet explores trends in aid, the motivations for aid, its impacts, and debates about reforming aid. It begins by examining aid magnitudes and who gives and receives aid. It discusses the multiple motivations and objectives of aid, some of which conflict with each other. It then explores the empirical evidence on the relationship between aid and growth, which is divided between research that finds no relationship and research that finds a positive relationship (at least under certain circumstances). It also examines some of the key challenges in making aid more effective, including the principal-agent problem and the related issue of conditionality, and concludes by examining some of the main proposals for improving aid effectiveness.
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Bibliographic InfoPaper provided by Center for Global Development in its series Working Papers with number 92.
Length: 24 pages
Date of creation: Jul 2006
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Web page: http://www.cgdev.org
Foreign aid; poverty reduction;
Find related papers by JEL classification:
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- O00 - Economic Development, Technological Change, and Growth - - General - - - General
- F00 - International Economics - - General - - - General
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