Foreign Aid, Donor Fragmentation, and Economic Growth

Annen, Kurt; Kosempel, Stephen

doi:10.2202/1935-1690.1863

Cited by 33 publications

(24 citation statements)

References 36 publications

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“…Despite the fact that donors have repeatedly been encouraged to increase the size of projects and shrink the number of recipient countries in the name of effectiveness (Acharya, de Lima and Moore 2006;Annen and Kosempel 2009;Brown and Swiss 2013;Knack and Rahman 2007), aid is being provided to a greater number of countries and with smaller sized projects than ever before (Kilby 2011;Swiss and Brown 2015). The research literature on aid from the disciplines of economics and political science have conventionally offered two main interpretations for why countries provide aid: (1) aid is provided to fight poverty and promote development in support of 'international humanitarianism' (Lumsdaine 1993;Opeskin 1996); and (2) aid is provided to achieve donor national self-interest in foreign policy, trade, and other areas of donor priority (Alesina and Dollar 2000;Dreher, Nunnenkamp and Thiele 2011;Morgenthau 1962;Woods 2008).…”

Section: Background: the Distribution Of Foreign Aidmentioning

confidence: 99%

Foreign aid allocation from a network perspective: The effect of global ties

Swiss

2017

Social Science Research

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This article examines competing explanations for foreign aid allocation on the global level and argues for a new approach to understanding aid from an institutionalist perspective. Using network data on all official bilateral aid relationships between countries in the period from 1975 through 2006 and data on recipient country ties to world society, the article offers an alternative explanation for the allocation of global foreign aid. Fixed effects negative binomial regression models on a panel sample of 117 developing countries reveal that global ties to world society in the form of non-governmental memberships and treaty ratifications are strong determinants of the network centrality of recipient countries in the global foreign aid network. Countries with a higher level of adherence and connection to world society norms and organizations are shown to be the beneficiaries of an increased number of aid relationships with wealthy donor countries. The findings also suggest that prior explanations of aid allocation grounded in altruist or realist motivations are insufficient to account for the patterns of aid allocation seen globally in recent years.

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Section: Background: the Distribution Of Foreign Aidmentioning

confidence: 99%

Foreign aid allocation from a network perspective: The effect of global ties

Swiss

2017

Social Science Research

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“…A number of studies associate aid effectiveness with nonvolatile aid flows (e.g. Bulir and Hamann, ; Chervin and van Wijnbergen, ; Hudson and Mosley, ; Kodama, ; Markandya et al., ) or nonfragmented aid (Annen and Kosempel, ; Djankov et al., ; Kimura et al., ).…”

Section: When Is Aid Most Likely To Work?mentioning

confidence: 99%

Growth, Poverty and Development Assistance: When Does Foreign Aid Work?

Sumner

Glennie²

2015

Global Policy

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This is a survey paper on aid effectiveness in terms of the contribution of development assistance to economic growth and poverty reduction. The article focuses primarily on the most recent generation of cross‐country studies. It concludes that there is a set of broad areas where the evidence reviewed shows signs of convergence that have direct relevance for policy decisions on aid and for aid‐effectiveness discussions. These areas are: aid levels (meaning if the level of aid is too low or too high); domestic political institutions (including political stability and the extent of decentralisation); the composition of aid (including sectors, modalities, objectives and time horizons); and the volatility and fragmentation of aid. We also identify two areas where there is little sign of convergence in the evidence: the importance or otherwise of ‘good’, meaning orthodox macroeconomic policies and whether grants are more effective than loans.

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“…Their estimations revealed an economically and statistically significant impact from short term aid -in fact, its impact was two-to-three times larger than in studies using aggregate aid. Furthermore, the studies of Ouattara and Strobl (2008) and Annen and Kosempel (2009) evaluated the effectiveness of "technical assistance", assuming that this type of aid stimulates human capital accumulation by facilitating knowledge transfer; nonetheless, these two studies achieved opposite results: the first one claimed the ineffectiveness of this aid, and the second asserted its effectiveness. Finally, Tezanos et al (2012) studied the effectiveness of aid grants and aid loans in Latin America and the Caribbean, suggesting that both were economically and statistically significant, although the estimated growth impact of concessional loans was greater than the impact of grants.…”

Section: Recent Studies On Aggregate Aid Effectivenessmentioning

confidence: 99%

Ayuda e Innovación: ¿un estímulo para la eficacia de la ayuda?

Montellano¹,

Vázquez²

2015

Revista Int. Cooperación Desarro.

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One of the most unanimous results of the economic literature is that innovation is a critical factor for sustained growth. Despite this consensus, previous research has not studied the impact of foreign aid devoted to promote developing countries' innovation capacities. For this reason, this paper analyzes the impact of Official Development Assistance for Science and Technology (ODA-ST) in the period prior to the last international economic recession. The analysis offers five important conclusions for better tailoring aid policies: i) ODA-ST effectively stimulates economic growth; ii) its impact may be higher in countries with low innovation capacities; iii) innovation exerts the strongest impact on growth; iv) income inequalities are an important obstacle for growth; and v) there is a a slow process of divergence in per capita income levels among developing countries. Therefore innovation is confirmed as a strategic "bet" on development, while focusing public foreign aid on enhancing developing countries' innovation capacities -specially in the least innovative ones-may constitute a "boost" to the effectiveness of aid.Keywords: Innovation, aid for science and technology, aid effectiveness, Official Development Assistance (ODA). ResumenUno de los resultados más unánimes de la investigación económica es que la innovación es uno de los principales determinantes de crecimiento económico sostenido. No obstante, ningún estudio ha contrastado el impacto que las ayudas para ciencia y tecnología ejercen sobre el ritmo de crecimiento de los países que las reciben. Este artículo analiza el impacto de la Ayuda Oficial al Desarrollo Científico-Tecnológica (AOD-CT) en el periodo anterior a la última crisis internacional, y ofrece cinco conclusiones relevantes para mejorar las políticas de ayuda: i) la AOD-CT estimula eficazmente el crecimiento; ii) el impacto de estas ayudas puede ser mayor en los países con menores capacidades de innovación; iii) la innovación es el principal determinante del crecimiento, iv) las desigualdades de rentas constituyen una importante obstáculo; y v) los dispares ritmos de progreso de los países en desarrollo se traducen en un lento proceso de divergencia en niveles de renta per cápita. Por lo tanto la innovación se confirma como una "apuesta" estratégica por el desarrollo, por lo que priorizar la mejora de las capacidades de innovación de los países en desarrollo -especialmente de los menos innovadores-puede impulsar la eficacia de la ayuda internacional.Palabras Clave: Innovación, Ayuda para la ciencia y tecnología, eficacia de la ayuda, Ayuda Oficial para el Desarrollo.

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Foreign Aid, Donor Fragmentation, and Economic Growth

Cited by 33 publications

References 36 publications

Foreign aid allocation from a network perspective: The effect of global ties

Foreign aid allocation from a network perspective: The effect of global ties

Growth, Poverty and Development Assistance: When Does Foreign Aid Work?

Ayuda e Innovación: ¿un estímulo para la eficacia de la ayuda?

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