Overseas Aid as an Instrument of Development Finance

Paul Mosley ()
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Paul Mosley: University of Sheffield

Chapter 4 in Development Finance, 2017, pp 79-110 from Palgrave Macmillan

Abstract: Abstract Overseas aid, originally conceived as short-term emergency help to enable colonies to become economically self-sufficient, remains, 70 years later, a vital prop to the economies of many developing countries, and is now starting to be supplied by developing-country governments themselves. An important reason for its survival is the tendency of aid flows to be relatively stable and reliable during times of crisis while non-concessional flows (bank lending, bond lending and foreign direct investment [FDI]) are subject to panic outflows. At the beginning, aid disappointed expectations, because too many donors failed to realise how much aid would leak into wasteful consumption; however, during the 1990s and 2000s this waste has been controlled somewhat and aid, on the balance of evidence, has been more productively used, in part because of changes in the structure of aid away from investment in equipment and towards technical assistance, humanitarian operations and budgetary support.

Keywords: Financial Development; Papanek; Poverty Reduction Strategy Papers; Micro-macro Paradox; Incremental Capital-output Ratio (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psifcp:978-1-137-58032-0_4

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DOI: 10.1057/978-1-137-58032-0_4

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