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The Effectiveness of Aid to Development. Focus on the Aid-Growth literature.

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par François Defourny
Facultés N-D de la Paix de Namur - Université Catholique de Louvain - Master in International and Development Economics 2005
  

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Graduate Programme in International and Development Economics

Facultés Universitaires Notre-Dame de la Paix, Namur
Université Catholique de Louvain

Academic Year 2005-2006

The Effectiveness of Aid to Development
Focus on the Aid-Growth Literature
François Defourny

Promoter: Professor Jean-Philippe Platteau Tutor: Christian Tritten

Project presented as part of the requirements for the award of the Master in
International and Development Economics

Table of Contents

1. Introduction

2. The objectives of aid to development

3. Aid effectiveness

4. The aid-growth relationship

5. The aid-growth literature

5.1. The optimism of Hansen and Tarp (2000)

5.2. The swinging pendulum of Clemens, Radelet and Bhavnani (2004)

6. New look at the aid-growth literature

6.1. The first part of the literature

6.2. Two turning points for a new aid-growth literature

6.2.1. Boone: the methodological turning point

6.2.2. Burnside and Dollar: the ideological turning point

7. The second part of the literature: reactions to Burnside and Dollar (1997) 7.1. The indicator for «good» economic policy

7.2. Sensitivity to model specification

7.3. Other conditioning variables than economic policy

7.4. Sensitivity due to the data base

7.5. Problem with the definition of aid

7.6. The detrimental consequences of the selectivity principle

8. Contemporary consensus and controversy

9. Conclusion

Acknowledgments

I wish to thank sincerely Christian Tritten for his precious availability. His assistance and his advices have been particularly helpful. I also would like to acknowledge Professor Jean-Philippe Platteau for the enlightening comments he made. Finally, I am grateful to Professor Michel Mignolet, Marie-Eve Mulquin and all my colleagues of the CREW who gave me the necessary flexibility to realise this work.

Introduction

The question of the effectiveness of aid is a particularly sensitive issue as it may have colossal implications for many developing countries. However, it is quite difficult to have a clear opinion about the ability of international assistance to contribute to development. The existing literature seems to be abundant but very diverging. Between optimistic donor's rapports, contradictory scientific publications and militant pleas of some NGOs the question is apparently difficult to answer. We decided to investigate in this direction to clarify as far as possible this important issue.

After a brief presentation of the diversity of aid objectives, we will see how the effectiveness of aid to development has been circumscribed to its impact on economic growth. We will then analyse two articles which tried to synthesize the existing literature on this topic. Next, we will propose our own interpretation of this literature. We will discuss the important shortcomings and failures of the ongoing debate about the efficiency of foreign assistance. Finally, we will observe the surprising fragility of nonetheless influent studies with crucial policy implications.

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