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Aid and Development

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  • Finn Tarp

    (Department of Economics, University of Copenhagen)

Abstract

Foreign aid looms large in the public discourse; and international development assistance remains squarely on most policy agendas concerned with growth, poverty and inequality in Africa and elsewhere in the developing world. The present review takes a retrospective look at how foreign aid has evolved since World War II in response to a dramatically changing global political and economic context. I review the aid process and associated trends in the volume and distribution of aid and categorize some of the key goals, principles and institutions of the aid system. The evidence on whether aid has been effective in furthering economic growth and development is discussed in some detail. I add perspective and identify some critical unresolved issues. I finally turn to the current development debate and discuss some key concerns, which I believe should be kept in mind in formulating any agenda for aid in the future.

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File URL: http://www.econ.ku.dk/english/research/publications/wp/2006/0612.pdf/
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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 06-12.

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Length: 25 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:kud:kuiedp:0612

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Keywords: foreign aid; aid impact;

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References

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  1. 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.
  2. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
  3. 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.
  4. Sylviane GUILLAUMONT JEANNENEY & Patrick GUILLAUMONT & Gérard CHAMBAS & Christopher ADAM & Jan Willem GUNNING, 2003. "Performance-Based Conditionality: A European Perspective," Working Papers 200306, CERDI.
  5. Feyzioglu, Tarhan & Swaroop, Vinaya & Zhu, Min, 1998. "A Panel Data Analysis of the Fungibility of Foreign Aid," World Bank Economic Review, World Bank Group, vol. 12(1), pages 29-58, January.
  6. Andersen, Thomas Barnebeck & Harr, Thomas & Tarp, Finn, 2006. "On US politics and IMF lending," European Economic Review, Elsevier, vol. 50(7), pages 1843-1862, October.
  7. Carl-Johan Dalgaard & Henrik Hansen, 2005. "The Return to Foreign Aid," Discussion Papers 05-04, University of Copenhagen. Department of Economics.
  8. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
  9. Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
  10. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
  11. 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.
  12. William Easterly, 2005. "Reliving the '50s: The Big Push, Poverty Traps, and Takeoffs in Economic Development," Working Papers 65, Center for Global Development.
  13. C. S. Adam & S. A. O'Connell, 1999. "Aid, Taxation and Development in Sub-Saharan Africa," Economics and Politics, Wiley Blackwell, vol. 11(3), pages 225-253, November.
  14. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May.
  15. Cornia, Giovanni Andrea & Jolly, Richard & Stewart, Frances (ed.), 1987. "Adjustment with a Human Face: Volume 1, Protecting the Vulnerable and Promoting Growth," OUP Catalogue, Oxford University Press, number 9780198286097, September.
  16. Collier, Paul & Dollar, David, 2001. "Can the World Cut Poverty in Half? How Policy Reform and Effective Aid Can Meet International Development Goals," World Development, Elsevier, vol. 29(11), pages 1787-1802, November.
  17. 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.
  18. Finn Tarp, 2006. "Aid and Development," Discussion Papers 06-12, University of Copenhagen. Department of Economics.
  19. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  20. Berthelemy, Jean-Claude & Tichit, Ariane, 2004. "Bilateral donors' aid allocation decisions--a three-dimensional panel analysis," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 253-274.
  21. 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.
  22. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
  23. Kanbur, Ravi, 2006. "The economics of international aid," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  24. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
  25. Channing Arndt & Sam Jones & Finn Tarp, 2006. "Aid and Development: The Mozambican Case," Discussion Papers 06-13, University of Copenhagen. Department of Economics.
  26. C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 17-41.
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