Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid

May 1, 2005

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper assesses the effectiveness of foreign aid in reducing poverty through its impact on human development indicators. We use a dataset of both bilateral aid and NGO aid flows. Our results show that NGO aid reduces infant mortality and does so more effectively than official bilateral aid. The impact on illiteracy is less significant. We also test whether foreign aid reduces government efforts in achieving developmental goals and find mixed evidence of a substitution effect.

Subject: Aid flows, Education spending, Foreign aid, Health care spending, Nongovernmental organizations

Keywords: dependent variable, education expenditure, government effort, health expenditure, recipient country government, WP

Pages:
31
Volume:
2005
DOI:
https://doi.org/10.5089/9781451861198.001
Issue:
100
Series:
Working Paper No. 2005/100
Stock No:
WPIEA2005100
ISBN:
9781451861198
ISSN:
1018-5941

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