Knowledge for better food systems

Book: Aid to developing countries

A new book written for the International Food Policy Research Institute about foreign aid allocation, governance, and economic growth.

This looks interesting - it’s been written for the International Food Policy Research Institute.  Details as follows:

Foreign aid to developing countries is the subject of debate among economists and development specialists. While some argue that aid promotes prosperity and reduces poverty, others assert that it hurts the economy and fosters poverty. Still others argue that aid has little impact one way or another. There is also disagreement about whether or not a nation’s quality of governance affects foreign aid’s impact. Do democratic governments, for example, use aid to promote economic growth more effectively than other forms of government?

In Foreign Aid Allocation, Governance, and Economic Growth, Akramov takes the position that aid and its effects are not monolithic but need to be distinguished by their intended ends. Among the aid types Akramov identifies are economic aid and aid to social sectors such as education or healthcare. Economic aid consists of two major categories: aid to production (agriculture, manufacturing, or mining, for example) and economic infrastructure (such as transport, storage, or communication networks). Using data on official development assistance compiled by the OECD, he analyzes the impact of economic and social aid on economic growth. He finds that economic aid appears to have a positive impact on economic growth by increasing the resources available for investment. By contrast, aid to social sectors does not seem to have significant impact on human capital—specifically a country’s secondary school enrollment rate.

Akramov’s findings also suggest that the quality of democratic governance is no guarantee of aid effectiveness in promoting economic growth in aid recipient countries. In fact, economic aid to less-democratic countries can be more effective, at least initially, if this aid is invested in physical means (assets) of production and economic infrastructure.

Aid to production sectors has declined as a percentage of total foreign aid over the past 30 years, falling to less than 10 per cent in the 2000s. Although further research into the question is necessary, the book suggests that aid targeted to increasing domestic investment might be an effective means of fostering economic growth in less developed countries.

Reference

Akramov K T (2012). Foreign Aid Allocation, Governance, and Economic Growth, Published for the International Food Policy Research Institute, University of Pennyslvania Press.

For more information and to buy the book see here and here.

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