Abstract
Relatively slow progress toward meeting the Millennium Development Goals (MDGs) by their 2015 target date has added urgency to the challenge of reducing global poverty. The authors of this new book--who include scholars from the IMF, World Bank, Oxford University, and the Center for Global Development--argue that the MDGs cannot be achieved without a substantial scaling up of foreign aid. They show how such increased aid flows must be managed effectively to ensure the greatest benefit. And they offer analysis and insight on a variety of macroeconomic policy implications that both donors and recipients should consider.
Abstract
This volume, edited by Michel A. Dessart and Roland E. Ubogu, records the presentations made and discussions held during the Inaugural Seminar of the Joint Africa Institute (JAI). The JAI was established in Abidjan, Côte d'Ivoire, by the African Development Bank, the IMF, and the World Bank to meet the pressing training needs of the African continent. The participants discussed four main topics: the changing role of the state, governance, and new capacity requirements; the challenge of achieving macroeconomic stability in Africa; the requirement for capacity building in Africa; and the role of international financial institutions in capacity building in Africa. The seminar was held in November 1999, but the topics and recommendations of the seminar remain current and of particular importance today. The seminar was held in English and French, and both language versions are contained in this volume. 240 pp. 2001
Abstract
Since the adoption of the Millennium Development Goals (MDGs) in 2000, the challenge of reducing poverty around the world has been more prominent on the agenda of the international community.1 Relatively slow progress toward meeting the MDGs by the 2015 target date has added to the urgency of this effort. Two influential reports—the United Nations Millennium Project Report (the “Sachs Report”) and the Commission for Africa Report (the “Blair Report”)—envisage substantial increases in aid flows to poor countries, especially to countries in sub-Saharan Africa. The international community sees increases in aid, along with improvements in recipient policies and freer global trade, as necessary for global prosperity and poverty reduction.
Abstract
Among the top priorities of the Millennium Development Goals (MDGs) is the eradication of “extreme poverty and hunger.” Achieving this goal will no doubt require action on several fronts—but central to any such effort remains the generating of high and sustained growth.1 What does this kind of growth require?
Abstract
Controversies about the effectiveness of foreign aid go back decades. Milton Friedman (1958), Peter Bauer (1972), William Easterly (2001), and other economists have leveled stinging critiques at aid, charging that it has enlarged government bureaucracies, perpetuated bad governments, enriched the elite in poor countries, or just been wasted. They cite the widespread poverty in Africa and South Asia despite three decades of aid, and point to countries that have received significant amounts of aid and have had disastrous growth records, including the Central African Republic, the Democratic Republic of the Congo, Haiti, Papua New Guinea, and Somalia. Critics call for aid programs to be dramatically reformed, substantially curtailed, or eliminated altogether.
Abstract
The organizers of this conference have asked me to speak about aid and poverty alleviation. We have already heard Steven Radelet provide a very thorough review of the state of the evidence on the effects of aid on growth.1 I would like to use this presentation to make three broad points linking this evidence on aid and growth to poverty alleviation.
Abstract
In recent years, aid flows have tended to become more concentrated on a subset of developing countries. 1 In consequence, they have sometimes become large relative to the recipient economy. Present efforts directed at radically increasing the total aid flow, if successful, will tend to reinforce this effect.2 Current concerns about aid absorption partly reflect the recognition that aid has often been poorly managed and ineffective in the past, but they also reflect the worry that aid may become problematic when it is large relative to the economy it is intended to assist, even if it is well managed.
Abstract
Increases in foreign aid inflows allow recipient countries to increase consumption and investment. Aid offers an opportunity to raise the standard of living, reduce poverty, and generate sustained growth. But to achieve these results, the increased aid must be used effectively. Aid recipients must find and manage good projects and must agree on the conditions for budgetary support. The imperative to use aid funds well can strain the administrative capacity of recipient governments. Aid flows can also weaken ownership, fragment and impair budgetary procedures, encourage rent-seeking behavior, and undermine the accountability of domestic institutions.
Abstract
The issues of effectiveness and absorptive capacity have attracted increasing attention in view of growing efforts to raise new and large-scale financial resources—beyond the 2000 Monterrey commitments—to help developing countries achieve the Millennium Development Goals (MDGs). The estimated annual cost of achieving the MDGs range from about $50 billion to $66 billion initially, rising to $126 billion by 2015, in incremental MDG spending requirements, on top of current aid flows.1 This represents a major increase in official development assistance (ODA) flows to developing countries as a share of OECD-Development Assistance Committee (DAC) country gross national income. At the individual country level, this implies a large increase in ODA, in some cases a tripling or quadrupling of current flows to countries already receiving high levels of aid.
Abstract
Concerns that large aid inflows will induce a sharp and sustained appreciation of the real exchange rate, discourage the expansion of exports (particularly nontraditional exports), and thereby damage growth prospects in the recipient economy are rarely far from the center of contemporary debates on the macroeconomics of aid to low-income countries. These concerns have recently come to the fore in a number of well-managed low-income countries that have already participated in the debt relief Initiative for Heavily Indebted Poor Countries (HIPC Initiative)—and which are identified by the United Nations Millennium Project (2005) as potential “fast-track” candidates for rapid scaling-up of aid flows. These countries face the prospect of significantly higher aid flows in the near future (and, arguably, strong pressure from donor nations to see these resources absorbed rapidly). Thus, many question whether this increased aid can generate sufficient returns, in terms of sustained growth, to outweigh the costs of absorbing it, or whether it will contribute to the unraveling of hard-won economic gains secured in recent years.