Kiel Working Papers, Kiel Institute for World Economics
No 1116:
Halving Poverty by Doubling Aid: How Well Founded is the Optimism of the World Bank?
Rolf J. Langhammer
Abstract: The article criticizes the World Bank as overy optimistic
concerning its ability to raise the effectiveness of aid by concentrating
aid on countries with "good" policies. It is shown that aid flows to the
main recipient regions yielded the highest correlation to growth when their
magnitudes shrank. It is argued that more aid can impair the quality of
domestic policies in the recipients (endogeneity problem). The paper
instead pleads for a shift of aid policies from country-oriented to
issue-oriented aid. An international endowment fund under supranational law
should help to finance such issues.
Keywords: Development aid; economic growth; poverty reduction; aid effectiveness; policy orientation, Dutch Disease effects of aid; (follow links to similar papers)
28 pages, July 2002
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