Beruflich Dokumente
Kultur Dokumente
EFFECTIVENESS OF
FOREIGN AID
Dickens Molo and Yong Zhao
April 29, 2013
Introduction
What is foreign aid?
Type of flows
Delivery of aids
Rationale for aid
Donors
Measurement of aid
Donors and recipients
Aid effectiveness
Case study on Kenya
Conclusion
Radelet, 2006
Types of Flows
Official Development Assistance (OAD)
Largest, flow to low and middle income countries.
Official Assistance (OA)
Flow to richer countries with per capita income higher than $9,000.
Delivery of Aid
Bilateral
Aid given directly from one country to another
Multilateral
Africa.
Japans aid is highly correlated with the UN voting patterns.
Countries that vote in tandem with Japan receive more assistance.
Democratic nations
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Measurement of Aid
Total Dollars
As a share of GDP
Size relative to the whole economy
As a share of Per Capita income
OECD
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Donor Countries
OECD
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OECD
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Effectiveness of Aid
Economic growth as the main indicator of effectiveness of
aid.
Different opinions and empirical results on the
effectiveness of aid.
No simple relationship between aid and growth.
Radelet 2006
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Karras (2006)
correlation between foreign aid and growth in per capita GDP
growth is positive, permanent, and statistically significant.
Gomanee, Girma, and Morrissey (2005) Foreign aid has
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De Waal, 1997
Exaggerate problems to facilitate fund raising.
Svensson, 2000a
Easterly,2006 White Mans Burden
Aid creates incentives for increased rent-seeking behavior
Martens, 2002
Reduces productive exchange, government has no interest in increasing the
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Agreements
Aid did help to improve health by supplying essential
economic incentives.
Marcos regime in Philippines and Duvalier regime in Haiti
Radelet 2006
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OECD
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Paris Declaration
Sets agendas to accelerate the goals set by Paris
Declaration
Ownership: Developing country governments will take
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Market:
SOKOSHAMBANI (market to farm in Kiswahili), helps smallscale potato farmers access intelligence on market prices;
access micro-finance institutions; order quality seeds and other
inputs; access training materials; and most importantly,
communicate directly with buyers from fast food restaurants. Its
exploits the free communications technology service in Kenya.
1. How does it improve economic status of a farmer? I started
potato farming in year 2000. The difference is that now we
have a ready market and dont suffer like before. We used to
sale a sack of potatoes for $17.00 but now we sell at $53.00
directly to the buyer and dont have to wait for days to receive
payment. says James Radama.
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Is an
outreach extension program educating young
scientists, the general public, policymakers, and
the media about biotechnology and biosafety.
Farmer vocational training programs
complemented by a publicly accessible website
with biotech information, brochures and
information booklets.
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Conclusion
The provision of aid has played a major part in
development in many third world countries.
Foreign aid therefore must be viewed positively as a
catalyst for development while still appreciating its
shortcomings. However it must be noted that foreign aid
only yields maximum results if coupled with the necessary
social and political reforms especially political stability and
sound governance and an entrepreneurial spirit on the part
of the citizens.
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References:
Agricultural sector development stratergy 2010-2020.
www.ascu.go.ke/DOCS/ASDS%20Final.pdf
Alesina A. Dollar D. 2000. Who Gives Foregin Aid to Whom and
Why? Journal of Economic Growth, 5: 33-63
Alesina A, Weder B. 1999. Do Corrupt Governments Receive Less
Foreign Aid? National Bureau of Economic Research. Working
Paper 7108.
Burnside C. Dollar D. 2000. Aid, policies, and growth. American
Economic Review 90: 847-868
http://www.oecd.org/dac/effectiveness/
parisdeclarationandaccraagendaforaction.htm
http://kenya.usaid.gov/what-we-do
Radelet, Steven. 2006. A Primer of Foreign Aid. Center for Global
Development. Working Paper Number 92