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Constraints to Achieving the MDGs with Scaled-Up Aid

  • François Bourguignon
  • Mark Sundberg

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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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
Contact details of provider: Web page: http://www.un.org/en/development/desa/working-papers.html
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  1. 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.
  2. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
  3. 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.
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