Scaling up aid or scaling down : the global economic crisis and Rwanda's MDGs
Rwanda is not on track to achieve most of the Millennium Development Goals at a time when hopes for scaled-up aid are mixed with concerns that, in the context of the global economic crisis, aid instead will be scaled down. This paper analyzes the effects of alternative scenarios for grant aid, government spending allocations (between infrastructure, agriculture, and human development), and government efficiency. The authors use an economy-wide model for development strategy analysis, Maquette for Millennium Development Goal Simulations. Under a plausible scenario for increased aid, annual growth in gross domestic product increases by as much as 0.6 percentage points relative to a baseline with a growth rate of 6 percent; by 2020, the headcount poverty rate declines to 32 percent, 3 percentage points lower than for the baseline. A plausible scenario for reduced aid leads to a symmetric growth reduction but a more pronounced increase in poverty, at 40 percent in 2020. When aid increases, the most positive growth and poverty reduction impacts occur if spending increases are allocated to infrastructure and agriculture; progress in human health and education is significant but weaker than if additional spending is focused on these areas. Given synergies and diminishing marginal returns from expansion in a limited area, the scenarios that may appear most attractive and politically feasible have a broad and balanced expansion across government functions, promoting both growth and human development.
|Date of creation:||01 Jun 2009|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
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.:
- Bourguignon, Francois & Diaz-Bonilla, Carolina & Lofgren, Hans, 2008. "Aid, service delivery, and the millennium development goals in an economy-wide framework," Policy Research Working Paper Series 4683, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4958. 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: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.