Foreign Aid and Economic Development

Paper Summary:

The purpose of this paper is to survey the available body of research done on the effectiveness of foreign aid as an agent for economic development of recipient countries, most of which come from the third world countries. In particular, it aims to assess how strong the empirical evidence is that aid has been an effective agent for economic growth. In so doing, it attempts to identify areas where future research is required.

Outline
Overview
Introduction
Econometric Models Used In the Literature
The Poverty Trap Model
Anti Aid Literature
Pro Aid Literature
Qualified View
Observed Gaps in Existing Research
Conclusion

From the Paper:

"Since its birth right after World War II when the United States of America (USA) released billions of money to assist Europe (Sogge, 2002) in reconstructing the latter's economy, foreign aid has been assumed to directly induce or at least influence economic development in a recipient country. Most donor rhetoric perpetuates this association (World Bank, 1998). Many studies have been undertaken to try to assess if aid actually fulfils its main objective, that is, to promote macroeconomic development in developing countries. After half a century characterized by some serious changes in world economy and politics (i.e. breakdown of Communism, globalization, terrorism), the link between foreign aid and economic growth remains at the center of debates on aid effectiveness."

More papers on Foreign Aid and Economic Development:

• Analytical Essay # 148476 : "US Aid and the Economic Development of Latin America"
• Essay # 84750 : "American Foreign Aid"
• Persuasive Essay # 133993 : "State-Led Economic Development for Developing Countries"

APA Citation:

MLA Citation: