Aid, Growth, and Development

The question of foreign aid's impact on economic growth and development is highly controversial and excites polarised opinions. Optimistic views of aid are exemplified by those of Jeffrey Sachs, who calls for a doubling of worldwide aid flows as a moral obligation of rich countries that will send 'forth mighty currents of hope' and lead to 'the end of poverty'. In contrast, William Easterly is a vocal sceptic, highlighting aid's apparent historic inability to buy growth. And today, in the midst of a serious global economic crisis, where aid is arguably more needed than ever, the attention of both the aid community and decision-makers is on Dambisa Moyo's 'Dead Aid', which argues for a complete cessation of aid flows to Africa. In this seminar Professor Finn Tarp will provide a balanced overview of the academic literature that has evaluated the effectiveness of aid across countries. Focus will be on the aggregate impact of aid; that is, its effect on country-wide indicators, putting both recent and past literature and insights in perspective.