Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid
Abstract
This paper assesses the effectiveness of foreign aid in reducing poverty through its impact on human development indicators. We use a dataset of both bilateral aid and NGO aid flows. Our results show that NGO aid reduces infant mortality and does so more effectively than official bilateral aid. The impact on illiteracy is less significant. We also test whether foreign aid reduces government efforts in achieving developmental goals and find mixed evidence of a substitution effect.Download Info
If 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.Bibliographic Info
Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/100.Length: 22
Date of creation: 01 May 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/100
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Email:
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
Order Information:
Web: http://www.imf.org/external/pubs/pubs/ord_info.htm
Related research
Keywords: Poverty reduction; Economic models;This paper has been announced in the following NEP Reports:
- NEP-AFR-2005-10-22 (Africa)
- NEP-ALL-2005-10-22 (All new papers)
References
References listed on IDEASPlease report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul Mosley & John Hudson & Sara Horrell, 1992. "Aid, the public sector and the market in less developed countries: A return to the scene of the crime," Journal of International Development, John Wiley & Sons, Ltd., vol. 4(2), pages 139-150, 03.
- C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," The Journal of Development Studies, Taylor and Francis Journals, vol. 37(6), pages 17-41.
- Alberto Alesina & David Dollar, 1998.
"Who Gives Foreign Aid to Whom and Why?,"
NBER Working Papers
6612, National Bureau of Economic Research, Inc.
- Alesina, Alberto & Dollar, David, 2000. " Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
- Dollar, David & Alesina, Alberto, 2000. "Who Gives Foreign Aid to Whom and Why?," Scholarly Articles 4553020, Harvard University Department of Economics.
- Stephen Bond & Frank Windmeijer, 2002.
"Finite Sample Inference for GMM Estimators in Linear Panel Data Models,"
10th International Conference on Panel Data, Berlin, July 5-6, 2002
C6-3, International Conferences on Panel Data.
- Steve Bond & Frank Windmeijer, 2002. "Finite sample inference for GMM estimators in linear panel data models," CeMMAP working papers CWP04/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- Robert Lensink & Howard White, 2000. "Aid allocation, poverty reduction and the Assessing Aid report," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 399-412.
- Mosley, Paul & Hudson, John & Horrell, Sara, 1987. "Aid, the Public Sector and the Market in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 97(387), pages 616-41, September.
- Susan Rose-Ackerman, 1996. "Altruism, Nonprofits, and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 701-728, June.
- Alonso-Borrego, Cesar & Arellano, Manuel, 1999.
"Symmetrically Normalized Instrumental-Variable Estimation Using Panel Data,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 17(1), pages 36-49, January.
- Alonso-Borrego, César & Arellano, Manuel, 1999. "Symmetrically normalized instrumental-variable estimation using panel data," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4655, Universidad Carlos III de Madrid.
- William Easterly & Ross Levine & David Roodman, 2003. "New Data, New doubts: A Comment on Burnside and Dollar's "Aid, Policies, and Growth" (2000)," NBER Working Papers 9846, National Bureau of Economic Research, Inc.
- Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
- T. M. Tsikata, 1998. "Aid Effectiveness - A Survey of the Recent Empirical Literature," IMF Policy Discussion Papers 98/1, International Monetary Fund.
- Clark, John, 1995. "The state, popular participation, and the voluntary sector," World Development, Elsevier, vol. 23(4), pages 593-601, April.
- Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004.
"On The Empirics of Foreign Aid and Growth,"
Economic Journal,
Royal Economic Society, vol. 114(496), pages F191-F216, 06.
- Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2001. "On the Empirics of Foreign Aid and Growth," EPRU Working Paper Series 03-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Sep 2003.
- Collier, Paul & Dollar, David, 1999.
"Aid allocation and poverty reduction,"
Policy Research Working Paper Series
2041, The World Bank.
- Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
- Michael Clemens & Steven Radelet & Rikhil Bhavnani, 2004.
"Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth,"
Working Papers
44, Center for Global Development.
- Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, EconWPA.
- Alexander Pivovarsky & Benedict J. Clements & Sanjeev Gupta & Erwin Tiongson, 2003. "Foreign Aid and Revenue Response: Does the Composition of Aid Matter?," IMF Working Papers 03/176, International Monetary Fund.
- Anna Fruttero & Varun Gauri, 2003. "Location decisions and nongovernmental organization motivation : evidence from rural Bangladesh," Policy Research Working Paper Series 3176, The World Bank.
- Tavares, Jose, 2003. "Does foreign aid corrupt?," Economics Letters, Elsevier, vol. 79(1), pages 99-106, April.
- Svensson, Jakob, 1998.
"Foreign aid and rent-seeking,"
Policy Research Working Paper Series
1880, The World Bank.
- Svensson, Jakob, 2000. "Foreign aid and rent-seeking," Journal of International Economics, Elsevier, vol. 51(2), pages 437-461, August.
- P. Guillaumont & L. Chauvet, 2001.
"Aid and Performance: A Reassessment,"
The Journal of Development Studies,
Taylor and Francis Journals, vol. 37(6), pages 66-92.
- Patrick GUILLAUMONT & Lisa CHAUVET, 1999. "Aid and Performance: A Reassessment," Working Papers 199910, CERDI.
- Richard Blundell & Steve Bond, 1995.
"Initial conditions and moment restrictions in dynamic panel data models,"
IFS Working Papers
W95/17, Institute for Fiscal Studies.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Burnside, Craig & Dollar, David, 1998. "Aid, the incentive regime, and poverty reduction," Policy Research Working Paper Series 1937, The World Bank.
- Pack, Howard & Pack, Janet Rothenberg, 1993. "Foreign Aid and the Question of Fungibility," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 258-65, May.
- Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
- Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
- Devarajan, Shantayanan & Swaroop, vinaya, 1998. "The implications of foreign aid fungibility for development assistance," Policy Research Working Paper Series 2022, The World Bank.
- Murshed, S Mansoob & Sen, Somnath, 1995. "Aid Conditionality and Military Expenditure Reduction in Developing Countries: Models of Asymmetric Information," Economic Journal, Royal Economic Society, vol. 105(429), pages 498-509, March.
- Easterly, William, 1999. "The ghost of financing gap: testing the growth model used in the international financial institutions," Journal of Development Economics, Elsevier, vol. 60(2), pages 423-438, December.
- Paul Mosley & John Hudson & Arjan Verschoor, 2004. "Aid, Poverty Reduction and the 'New Conditionality'," Economic Journal, Royal Economic Society, vol. 114(496), pages F217-F243, 06.
- Meyer, Carrie A., 1995. "Opportunism and NGOs: Entrepreneurship and green north-south transfers," World Development, Elsevier, vol. 23(8), pages 1277-1289, August.
Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Yousuf, Ahmed Sadek, 2012.
"Assessing Impact of Health Oriented Aid on Infant Mortality Rates,"
MPRA Paper
43212, University Library of Munich, Germany, revised 10 Dec 2012.
- Yousuf, Ahmed Sadek, 2012. "Assessing Impact of Health Oriented Aid on Infant Mortality Rates," EconStor Preprints 67391, ZBW - German National Library of Economics.
- Nunnenkamp, Peter & Weingarth, Janina & Weisser, Johannes, 2009.
"Is NGO aid not so different after all? Comparing the allocation of Swiss aid by private and official donors,"
European Journal of Political Economy,
Elsevier, vol. 25(4), pages 422-438, December.
- Peter Nunnenkamp & Janina Weingarth & Johannes Weisser, 2008. "Is NGO Aid Not So Different After All? Comparing the Allocation of Swiss Aid by Private and Official Donors," Kiel Working Papers 1405, Kiel Institute for the World Economy.
- Ma. Cecilia Calderón & Alberto Chong, 2006. "¿Contribuye la ayuda extranjera a reducir la desigualdad del ingreso?," Research Department Publications 4438, Inter-American Development Bank, Research Department.
- Ahmed, Vaqar & Wahab, Mohammad Abdul, 2011. "Foreign assistance and economic growth: evidence from Pakistan 1972 - 2010," MPRA Paper 30344, University Library of Munich, Germany.
- Mesplé-Somps, Sandrine & Gubert, Flore & Chauvet, Lisa, 2010.
"Are Remittances More Effective Than Aid to Reduce Child Mortality? An Empirical Assessment Using Inter and Intra-Country Data,"
Open Access publications from Université Paris-Dauphine
urn:hdl:123456789/4301, Université Paris-Dauphine.
- Lisa Chauvet & Flore Gubert & Sandrine Mesplé-Somps, 2009. "Are Remittances More Effective Than Aid To Reduce Child Mortality? An Empirical Assessment using Inter and Intra-Country Data," Working Papers DT/2009/11, DIAL (Développement, Institutions et Mondialisation).
- Channing Arndt & Sam Jones & Finn Tarp, 2009.
"Aid and Growth: Have We Come Full Circle?,"
Discussion Papers
09-22, University of Copenhagen. Department of Economics.
- Channing Arndt & Sam Jones & Finn Tarp, 2009. "Aid and Growth: Have We Come Full Circle?," Working Papers WIDER Discussion Paper 20, World Institute for Development Economic Research (UNU-WIDER).
- Channing Arndt & Sam Jones & Finn Tarp, 2010. "Aid and Growth Have We Come Full Circle?," Working Papers id:2513, eSocialSciences.
- Ma. Cecilia Calderón & Alberto Chong, 2006. "Does Foreign Aid Help Reduce Income Inequality?," Research Department Publications 4437, Inter-American Development Bank, Research Department.
- Patrick Guillaumont, 2011. "Aid effectiveness for poverty reduction:macroeconomic overview and emerging issues," Working Papers halshs-00554285, HAL.
- Bah, El-hadj M. & Ward, Jeremy, 2011. "Effectiveness of foreign aid in Small Island Developing States," MPRA Paper 32062, University Library of Munich, Germany.
- Yousuf, Ahmed Sadek, 2012. "Impact of Health Aid on Infant Mortality Rate," MPRA Paper 42945, University Library of Munich, Germany, revised 12 Oct 2012.
- David Locke Newhouse & Prachi Mishra, 2007. "Health Aid and Infant Mortality," IMF Working Papers 07/100, International Monetary Fund.
- Elsy T. KIZHAKETHALACKAL, 2009. "A Note On Infant Mortality And Foreign Health-Aid," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 9(2).
Lists
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.Statistics
Access and download statisticsCorrections
When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:05/100For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
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.

