Aid Effectiveness for Poverty Reduction: Lessons from Cross‑country Analyses, with a Special Focus on Vulnerable Countries

Patrick Guillaumont () and Laurent Wagner

Revue d’économie du développement, 2014, vol. 22, issue HS01, 217-261

Abstract: Cross?country econometric studies of aid effectiveness are numerous and often criticized. Relying on results of those which seem the most relevant and robust, this paper argues that aid is leading to poverty reduction, in particular in vulnerable countries. It examines the main methodological challenges faced by these studies, related to the definition aid, to its endogeneity, to the heterogeneity of the country features conditioning its effectiveness, to its variable returns, to the time dynamics of this effectiveness. Three main channels by which aid may influence the poverty levels are considered: the economic growth, the public social expenditures, and the macroeconomic stabilizing impact, interrelated with the two other channels. The stabilizing impact of aid has a major influence on poverty reduction, which cannot be evidenced without cross country analyses. JEL Classification: F35, O11, O40, C21, I3.

Keywords: aid; growth; poverty; vulnerability; instability; stabilizing impact; thresholds; public expenditures; education; health; budget support; conditionality; cross-sectional studies (search for similar items in EconPapers)
JEL-codes: C21 F35 I3 O11 O40 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (26)

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Related works:
Working Paper: Aid effectiveness for poverty reduction: lessons from cross-country analyses, with a special focus on vulnerable countries (2014)
Working Paper: Aid effectiveness for poverty reduction: lessons from cross-country analyses, with a special focus on vulnerable countries (2014)
Working Paper: Aid effectiveness for poverty reduction: lessons from cross-country analyses, with a special focus on vulnerable countries (2014)
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