Constraints to Achieving the MDGs with Scaled-Up Aid
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.
|Date of creation:||Mar 2006|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.un.org/en/development/desa/working-papers.html|
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- 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.
- David Dollar & Craig Burnside, 2000.
"Aid, Policies, and Growth,"
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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.
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