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Aid allocation, poverty reduction and the Assessing Aid report

โœ Scribed by Robert Lensink; Howard White

Publisher
John Wiley and Sons
Year
2000
Tongue
English
Weight
129 KB
Volume
12
Category
Article
ISSN
0954-1748

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โœฆ Synopsis

Assessing Aid argues that aid should be reallocated in favour of poor countries with good policies. This argument is based on a model in which poverty depends on growth, and growth on aid, the impact of aid being higher in countries with good policies. So-called poverty-ecient' aid allocations are thus calculated, which are shown to be at odds with those of bilateral donors. There are a number of theoretical and empirical shortcomings in this work. First, aid can aect poverty through channels other than growth. Second, what constitutes good policies' is debatable. Third, the empirical estimates are very sensitive to changes in model speciยฎcation and sample. This paper critically reviews these three issues and ยฎnds the poverty-oriented aid reallocations implied in Assessing Aid to be an unreliable guide to policy.

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