The Curse of the Elders? Aid Effectiveness and Gerontocracy in Developing Countries

Marc Raffinot and Baptiste Venet ()
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Baptiste Venet: LEDa, UMR DIAL-Paris-Dauphine

No DT/2011/03, Working Papers from DIAL (Développement, Institutions et Mondialisation)

Abstract: (english) In this paper we use a simple standard overlapping-generation model to assess the impact of foreign aid. Because of deference to the elders, donors are not able to modify the sharing out of aid between the old and the young in the recipient economy. The model shows that, if aid is considered as a device intended to help attain the spontaneous steady state of the economy, it may lead to a rise or fall in savings, and hence in the growth rate of the economy, depending on a threshold share of aid accruing to elders. Alternately, if aid is intended to help the economy to reach its golden-rule steady state, the relevant level of aid increases with the share of aid accruing to elders, up to a certain threshold. If this share is higher than the threshold, the optimal level of aid is negative. _________________________________ (français) Nous utilisons un modèle à générations imbriquées pour montre que la répartition de l’aide entre jeunes et vieux peut avoir un impact sur l’efficacité de l’aide en termes d’épargne, de croissance et de bien-être. Les sociétés en développement sont généralement marquées par une « déférence pour les anciens » profondément ancrée dans la culture traditionnelle. Nous supposons que les donateurs sont incapables de manipuler cette part, et nous montrons que la part de l’aide qui revient aux vieux a un impact sur la croissance et le bien-être positif en dessous d’un certain seuil et négatif au-delà.

Keywords: Developing Countries; Elders; Aid effectiveness; Overlapping Generations Models. (search for similar items in EconPapers)
JEL-codes: E61 F35 F43 O11 O19 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2011-01
New Economics Papers: this item is included in nep-dev, nep-dge, nep-lam and nep-mac
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