IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Aid effectiveness for poverty reduction: lessons from cross-country analyses, with a special focus on vulnerable countries

  • Patrick GUILLAUMONT

    ()

    (Ferdi)

  • Laurent WAGNER

    ()

    (Ferdi)

Introduction: focus of the paperFollowing the adoption of the MDG, particularly the first one that is to reduce poverty by half between 1995 and 2015, numerous studies have examined how external aid can contribute to their achievement. The formula "doubling aid to reduce the poverty by half" relied on the implicit assumption that aid was an effective instrument for poverty reduction. The formula and corresponding assumption have been debated. Two opposite views clearly appeared, one, represented by Jeffrey Sachs in his End of Poverty, underlining the need for a big push to get low income countries out of poverty traps, the other one, illustrated by the attacks of William Easterly against aid as a support of a big push and the idea of a poverty trap, and also including arguments about a limited absorptive capacity. Elsewhere we have argued that the absorptive capacity of aid depends on aid modalities and can be enhanced by a reform of aid, a way by which big push and absorptive capacity views can be reconciled and to which we come back later (Guillaumont and Guillaumont Jeanneney, 2010).Actually the academic debate on aid effectiveness of the first millennium decade has been dominated by another controversy, relying on cross country regressions and initiated by the highly influential paper of Burnside and Dollar (2000). After so many cross country studies following their paper, supporting or, more often, criticizing it, there seems to be a temptation to consider this research orientation as a deadlock and to switch to micro impact analysis. Whatever the importance and need of impact micro-analyses, we argue that it would be a dangerous dismissal to give up the cross-section approach, for several reasons. First the methodological weaknesses of many studies does not entail that other ones relying on better methodology and data cannot lead to more robust results. Second, since cross section studies on aid effectiveness will never be totally given up, there is a risk to see only the most provocative (and possibly least robust) retaining the attention of media and policy makers, a policy challenge to be kept in mind in the orientation of research. Finally micro studies and impact analyses, while they supply policy makers with useful information in a given context, are not an appropriate tool for assessing the impact of macro-economic features of countries on aid effectiveness.The aim of this paper, relying on results of the cross country literature on aid effectiveness, and drawing only on those we consider as particularly relevant and robust is to examine how aid can contribute to poverty reduction, with a special focus on the way it can address the vulnerability of many developing countries.

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.

File URL: http://www.ferdi.fr/sites/www.ferdi.fr/files/publication/fichiers/wp96_pguillaumont_et_lwagner_aid_effectiveness_for_poverty_reduction2_0.pdf
Download Restriction: no

Paper provided by FERDI in its series Working Papers with number P96.

as
in new window

Length:
Date of creation: Mar 2014
Date of revision:
Handle: RePEc:fdi:wpaper:1478
Contact details of provider: Phone: +33473177542
Web page: http://ferdi.fr/

More information through EDIRC

References listed on IDEAS
Please 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.:

as in new window
  1. 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.
  2. Paul Collier & Benedikt Goderis, 2010. "Does Aid Mitigate External Shocks?," Working Papers id:3216, eSocialSciences.
  3. Tseday Jemaneh Mekasha & Finn Tarp, 2013. "Aid and Growth: What Meta-Analysis Reveals," Journal of Development Studies, Taylor & Francis Journals, vol. 49(4), pages 564-583, April.
  4. 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.
  5. Osei, Robert & Morrissey, Oliver & Lloyd, Tim, 2005. "The Fiscal Effects of Aid in Ghana," Working Paper Series RP2005/61, World Institute for Development Economic Research (UNU-WIDER).
  6. Patrick Guillaumont & Catherine Korachais & Julie Subervie, 2010. "How Macroeconomic Instability Lowers Child Survival," Post-Print halshs-00566935, HAL.
  7. Christina Wieser, 2011. "Determinants of the Growth Elasticity of Poverty Reduction. Why the Impact on Poverty Reduction is Large in Some Developing Countries and Small in Others," WIFO Working Papers 406, WIFO.
  8. Oecd, 2002. "Aid volume, channels and allocations for poverty reduction," OECD Journal on Development, OECD Publishing, vol. 3(3), pages 33-46.
  9. d’Aiglepierre, Rohen & Wagner, Laurent, 2013. "Aid and Universal Primary Education," Economics of Education Review, Elsevier, vol. 37(C), pages 95-112.
  10. Ouattara, B., 2006. "Foreign aid and government fiscal behaviour in developing countries: Panel data evidence," Economic Modelling, Elsevier, vol. 23(3), pages 506-514, May.
  11. Hristos Doucouliagos & Martin Paldam, 2006. "Aid Effectiveness on Accumulation: A Meta Study," Kyklos, Wiley Blackwell, vol. 59(2), pages 227-254, 05.
  12. Kremer, Michael Robert & Miguel, Edward A. & Thorton, Rebecca L, 2004. "Incentives to Learn," Center for International and Development Economics Research, Working Paper Series qt9kc4p47q, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  13. Hristos Doucouliagos & Martin Paldam, 2005. "Conditional Aid Effectiveness. A Meta Study," Economics Working Papers 2005-14, Department of Economics and Business Economics, Aarhus University.
  14. Muhammed Islam, 2005. "Regime changes, economic policies and the effect of aid on growth," Journal of Development Studies, Taylor & Francis Journals, vol. 41(8), pages 1467-1492.
  15. Sanjay Reddy & Camelia Minoiu, 2009. "Development Aid and Economic Growth; A Positive Long-Run Relation," IMF Working Papers 09/118, International Monetary Fund.
  16. Collier, Paul & Guillaumont, Patrick & Guillaumont, Sylviane & Gunning, Jan Willem, 1997. "Redesigning conditionality," World Development, Elsevier, vol. 25(9), pages 1399-1407, September.
  17. Paul Mosley & Abrar Suleiman, 2005. "Aid, agriculture and poverty in developing countries," Working Papers 2005010, The University of Sheffield, Department of Economics, revised Jun 2005.
  18. 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.
  19. Rati Ram, 2011. "Growth elasticity of poverty: direct estimates from recent data," Applied Economics, Taylor & Francis Journals, vol. 43(19), pages 2433-2440.
  20. David Roodman, 2004. "The Anarchy of Numbers: Aid, Development, and Cross-country Empirics," Development and Comp Systems 0412003, EconWPA.
  21. Jean-Claude Berthélemy, 2004. "To what extent are African education policies pro-poor ?," Cahiers de la Maison des Sciences Economiques bla04003, Université Panthéon-Sorbonne (Paris 1).
  22. Rajan, Raghuram G. & Subramanian, Arvind, 2011. "Aid, Dutch disease, and manufacturing growth," Journal of Development Economics, Elsevier, vol. 94(1), pages 106-118, January.
  23. repec:pri:rpdevs:deaton_instruments_randomization_learning_all_04april_2010 is not listed on IDEAS
  24. Loayza, Norman V. & Raddatz, Claudio, 2006. "The composition of growth matters for poverty alleviation," Policy Research Working Paper Series 4077, The World Bank.
  25. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
  26. Breen, R. & Garcia-Penalosa, C., 1999. "Income Inequality and Macroeconomic Volatility: an Empirical Investigation," Economics Papers 1999-w20, Economics Group, Nuffield College, University of Oxford.
  27. Tarp, Finn, 2006. "Aid and Development," MPRA Paper 13171, University Library of Munich, Germany.
  28. Thomas, Duncan & Beegle, Kathleen & Frankenberg, Elizabeth & Sikoki, Bondan & Strauss, John & Teruel, Graciela, 2004. "Education in a crisis," Journal of Development Economics, Elsevier, vol. 74(1), pages 53-85, June.
  29. N. Van De Sijpe, 2010. "Is foreign aid fungible? Evidence from the education and health sectors," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 10/688, Ghent University, Faculty of Economics and Business Administration.
  30. Lisa Chauvet & Patrick Guillaumont, 2011. "Aid, Volatility and Growth Again. When Aid Volatility Matters and When it Does Not," Working Papers halshs-00557123, HAL.
  31. Hristos Doucouliagos & Martin Paldam, 2009. "The Aid Effectiveness Literature: The Sad Results Of 40 Years Of Research," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 433-461, 07.
  32. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
  33. Rati Ram, 2004. "Recipient country's 'policies' and the effect of foreign aid on economic growth in developing countries: additional evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(2), pages 201-211.
  34. Feeny, Simon & de Silva, Ashton, 2012. "Measuring absorptive capacity constraints to foreign aid," Economic Modelling, Elsevier, vol. 29(3), pages 725-733.
  35. Edward Miguel & Michael Kremer & Rebecca Thornton, 2004. "Incentives to learn," Natural Field Experiments 00289, The Field Experiments Website.
  36. Laurent WAGNER, 2008. "Thresholds in Aid Effectiveness," Working Papers 200822, CERDI.
  37. Pack, Howard & Pack, Janet Rothenberg, 1990. "Is Foreign Aid Fungible? The Case of Indonesia," Economic Journal, Royal Economic Society, vol. 100(399), pages 188-94, March.
  38. Boriana Yontcheva & Nadia Masud, 2005. "Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid," IMF Working Papers 05/100, International Monetary Fund.
  39. Adam, Christopher & Chambas, Gerard & Guillaumont, Patrick & Guillaumont Jeanneney, Sylviane & Gunning, Jan Willem, 2004. "Performance-Based Conditionality: A European Perspective," World Development, Elsevier, vol. 32(6), pages 1059-1070, June.
  40. Channing Arndt & Sam Jones & Finn Tarp, 2006. "Aid and Development: The Mozambican Case," Discussion Papers 06-13, University of Copenhagen. Department of Economics.
  41. Gauthier, Bernard & Wane, Waly, 2008. "Bypassing health providers : the quest for better price and quality of health care in Chad," Policy Research Working Paper Series 4462, The World Bank.
  42. Guillaumont, Patrick & Wagner, Laurent, 2012. "Aid and Growth Accelerations: Vulnerability Matters," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  43. 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.
  44. KIMURA Hidemi & SAWADA Yasuyuki & MORI Yuko, 2007. "Aid Proliferation and Economic Growth: A Cross-Country Analysis," Discussion papers 07044, Research Institute of Economy, Trade and Industry (RIETI).
  45. Patrick Guillaumont, 2009. "Caught in a trap. Identifying the least developed countries," Post-Print hal-00436331, HAL.
  46. Jonas Dovern & Peter Nunnenkamp, 2007. "Aid and Growth Accelerations: An Alternative Approach to Assessing the Effectiveness of Aid," Kyklos, Wiley Blackwell, vol. 60(3), pages 359-383, 08.
  47. Arjan Verschoor & Adriaan Kalwij, 2006. "Aid, social policies and pro-poor growth," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(4), pages 519-532.
  48. Adam Wagstaff & Mariam Claeson, 2004. "The Millennium Development Goals for Health : Rising to the Challenges," World Bank Publications, The World Bank, number 14954, January.
  49. 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.
  50. Angus Deaton, 2010. "Instruments, randomization, and learning about development," Working Papers 1224, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  51. Rachid LAAJAJ & Patrick GUILLAUMONT, 2006. "When instability increases the effectiveness of aid projects," Working Papers 200637, CERDI.
  52. Maurice J. G. Bun & Frank Windmeijer, 2010. "The weak instrument problem of the system GMM estimator in dynamic panel data models," Econometrics Journal, Royal Economic Society, vol. 13(1), pages 95-126, 02.
  53. Sylviane Guillaumont Jeanneney & Sampawende Jules Tapsoba, 2012. "Aid and Income Stabilization," Post-Print halshs-00690363, HAL.
  54. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
  55. Channing, Arndt & Jones, Sam & Tarp, Finn, 2010. "Aid, Growth, and Development Have We Come Full Circle?," Working Paper Series wp2010-96, World Institute for Development Economic Research (UNU-WIDER).
  56. 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.
  57. Rati Ram, 2003. "Roles of Bilateral and Multilateral Aid in Economic Growth of Developing Countries," Kyklos, Wiley Blackwell, vol. 56(1), pages 95-110, February.
  58. Filmer, Deon & Pritchett, Lant, 1999. "The impact of public spending on health: does money matter?," Social Science & Medicine, Elsevier, vol. 49(10), pages 1309-1323, November.
  59. Stefan Dercon & Pramila Krishnan, 1997. "In sickness and in health... risk-sharing within households in rural Ethiopia," Economics Series Working Papers WPS/1997-12, University of Oxford, Department of Economics.
  60. Alassane DRABO & Christian EBEKE, 2010. "Remittances, Public Health Spending and Foreign Aid in the Access to Health Care Services in Developing Countries," Working Papers 201004, CERDI.
  61. ., 2006. "HIV/AIDS and Development," Chapters, in: The Elgar Companion to Development Studies, chapter 48 Edward Elgar Publishing.
  62. Patrick Guillaumont & Catherine Korachais, 2011. "When unstable, growth is less pro poor," Working Papers halshs-00556672, HAL.
  63. T. Paul Schultz, 2001. "School Subsidies for the Poor: Evaluating the Mexican Progresa Poverty Program," Working Papers 834, Economic Growth Center, Yale University.
  64. Dollar, David & Levin, Victoria, 2004. "Increasing selectivity of foreign aid, 1984-2002," Policy Research Working Paper Series 3299, The World Bank.
  65. Sylviane Guillaumont Jeanneney & Sampawende Jules Tapsoba, 2011. "Aid and Income Stabilization," Working Papers halshs-00554289, HAL.
  66. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
  67. Jessica Cohen & Pascaline Dupas, 2008. "Free Distribution or Cost-Sharing? Evidence from a Malaria Prevention Experiment," NBER Working Papers 14406, National Bureau of Economic Research, Inc.
  68. Lanjouw, Peter & Ravallion, Martin, 1999. "Benefit Incidence, Public Spending Reforms, and the Timing of Program Capture," World Bank Economic Review, World Bank Group, vol. 13(2), pages 257-73, May.
  69. Stefan C. Norrbin & F. Pinar Yigit, 2005. "The Robustness of the Link between Volatility and Growth of Output," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 343-356, July.
  70. David Locke Newhouse & Prachi Mishra, 2007. "Health Aid and Infant Mortality," IMF Working Papers 07/100, International Monetary Fund.
  71. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2011. "Financial Development and Poverty Reduction: Can There be a Benefit without a Cost?," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 143-163.
  72. 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.
  73. Rebecca L. Thornton, 2008. "The Demand for, and Impact of, Learning HIV Status," American Economic Review, American Economic Association, vol. 98(5), pages 1829-63, December.
  74. Farasat A. S. Bokhari & Yunwei Gai & Pablo Gottret, 2007. "Government health expenditures and health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 16(3), pages 257-273.
  75. repec:inr:wpaper:246705 is not listed on IDEAS
  76. repec:dau:papers:123456789/5400 is not listed on IDEAS
  77. Castro-Leal, Florencia & Dayton, Julia & Demery, Lionel & Mehra, Kalpana, 1999. "Public Social Spending in Africa: Do the Poor Benefit?," World Bank Research Observer, World Bank Group, vol. 14(1), pages 49-72, February.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fdi:wpaper:1478. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vincent Mazenod)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.