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Constraints to Achieving the MDGs with Scaled-Up Aid

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  • François Bourguignon
  • Mark Sundberg

Abstract

This paper examines the macroeconomic and structural constraints to scaling up aid flows to developing countries to meet the Millennium Development Goals in 2015, including infrastructure, competitiveness and the real exchange rate, labour markets, fiscal constraints, governance, and aid volatility and fragmentation. The impact of these constraints on cost-efficient sequencing and composition of scaled-up aid flows is considered, using a dynamic computable general equilibrium model applied to Ethiopia. The main conclusions are that: (i) accelerating growth through productivity-enhancing infrastructure investment (and improved governance) is key to achieving the MDGs; (ii) large increases in aid risk undermining competitiveness and future growth; and (iii) skilled labour constraints require careful aid sequencing that limit the scope for frontloading.

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File URL: http://www.un.org/esa/desa/papers/2006/wp15_2006.pdf
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Bibliographic Info

Paper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number 15.

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Length: 26 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:une:wpaper:15

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Keywords: Millennium Development Goals (MDGs); aid effectiveness; scaling up aid; absorptive capacity.;

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References

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  1. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
  2. 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.
  3. Estache, Antonio, 2004. "Emerging infrastructure policy issues in developing countries - a survey of the recent economic literature," Policy Research Working Paper Series 3442, The World Bank.
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Citations

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Cited by:
  1. Asmah, Emmanuel E. & Levin, Jorgen, 2008. "Aid-Financed Public Investments and the Dutch Disease: Evidence from Tanzania," Working Papers 2008:3, Örebro University, School of Business.
  2. Osakwe, Patrick N. & Ben Hammouda, Hakim, 2006. "Financing Development in Africa: Trends, Issues and Challenges," MPRA Paper 1815, University Library of Munich, Germany.
  3. Bourguignon, Fran.ois & Sundberg, Mark, 2006. "Absorptive Capacity and Achieving the MDGs," Working Paper Series RP2006/47, World Institute for Development Economic Research (UNU-WIDER).
  4. Rob Vos & Marco V. Sánchez & Cornelia Kaldewei, 2008. "Latin America and the Caribbean’s Challenge to Reach the MDGs: Financing Options and Trade-offs," Working Papers 68, United Nations, Department of Economics and Social Affairs.
  5. Acharya, Arnab & Alvarez, Melisa Mart.nez, 2012. "Aid Effectiveness in the Health Sector," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Feeny, Simon & de Silva, Ashton, 2012. "Measuring absorptive capacity constraints to foreign aid," Economic Modelling, Elsevier, vol. 29(3), pages 725-733.

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