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Professor Tarp has four decades of experience in academic and applied development economics research and teaching. His field experience covers more than two decades of in-country work in 35 countries across Africa and the developing world more...
In this part of the ReCom–Research and Communication on Foreign Aid project we look at what aid can do to create more economic growth and employment . The key questions include; What are the effects of aid on growth? Through which channels does aid act best as a catalyzer for growth? How can aid help improve the livelihoods of the poorest people, improve the opportunities for women in the labour market, and provide more employment for young people?
This is part of the 'ReCom – research and communication on foreign aid' project.
Focal point: Finn Tarp
Assistant: Janis Vehmaan-Kreula
Communications: Annett Victorero
In recent years, academic studies have been converging towards the view that foreign aid promotes aggregate economic growth. We employ a simulation approach to: (i) validate the coherence of empirical aid-growth studies published since 2008; and (ii)...
We investigate the marginal productivity of investment across countries. The aim is to estimate the return on investments financed by foreign aid and by domestic resource mobilization, using aggregate data. Both returns are expected to vary across...
This is an introduction to the UNU-WIDER special issue of World Development on aid policy and the macroeconomic management of aid. We provide an overview of the 10 studies, grouping them under three sub-themes: the aid–growth relationship; the supply...
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Part of Journal Special Issue Aid Policy and the Macroeconomic Management of Aid
Understanding chronic poverty and its evolution is complex given the amount of information involved. This paper proposes a new approach to analysing the evolution of chronic poverty in a multivariate setting using a Shapley decomposition of a...
Economic growth has had a negative effect on unemployment and poverty reduction in Africa. The transition from low- to middle income requires within sector increases in productivity and a shift of labour resources from low productivity agriculture to...
11 September 2014 by Roger Williamson In this interview Finn Tarp, Director of UNU-WIDER, discusses the evidence uncovered in the aid and growth and...
This position paper on Aid, Growth, and Employment was prepared by UNU-WIDER under the ReCom programme of Research (Re) and Communication (Com) on foreign aid. It aims to provide a coherent up-to-date overview and guide to a complex issue in the...
Does foreign aid promote aggregate economic growth? In contrast to widespread perceptions, academic studies of this question have been rapidly converging towards a positive answer. We employ a simulation approach to (i) validate the coherence of...
China’s importance as a major donor outside the traditional Western donors has been increasing and this has helped to bridge the funding gaps in developing countries. At the same time, South-South financial assistance still comes with less...
The authors comprehensively analyse the long-run effect of foreign aid (ODA) on key macroeconomic variables in 36 sub-Saharan African countries from the mid-1960s to 2007, using a well-specified co-integrated VAR model as statistical benchmark...
28 February 2014 In this interview Sam Jones summarizes the findings of original UNU-WIDER work on the impact of aid on growth. Using data covering...
Growth and poverty reduction in Africa are weakly linked. This paper argues that the reason is that Africa has failed to create enough good jobs. Structural transformation―the relative growth of employment in high productivity sectors―has not...
This paper investigates how a development intervention which targets extremely poor households with investment capital influences relationships between those households and the landowning elite. It places this investigation in the context of the...
Agriculture plays an important role in terms of employment and its contribution to gross domestic product in many African countries. Thus, any policy initiative targeted towards poverty reduction in Africa should consider the agricultural sector as...
The research programme ReCom – Research and communication on foreign aid – is ending this year. There is a large and unique collection of research...
Foreign aid is a significant element of Uganda’s long-run fiscal system. Aid is associated with increased tax collection effort and public spending in Uganda. Development assistance is also associated with reduced domestic borrowing in Uganda. Aid is...
This paper investigates the impact of foreign aid on economic growth in member countries of the Economic Community of West African States using panel data for 1990-2009 and a three equation simultaneous-equations model. The effect of foreign aid on...
This paper seeks to (i) establish the areas in which aid from the major donors is concentrated; (ii) examine how aid has been allocated to the environmental sectors, and (iii) review the factors behind the success of environmental projects. Using...
The mixed record on the 2015 Millennium Development Goal (MDG) targets and the focus on global public goods in post-MDG debates questions the future of traditional development co-operation (official development assistance, ODA). Meanwhile...
Over the last decade there has been increasing demand to make research more useful and applicable for policy-making. And that is also very true within...
The programme did lead participating households to use improved seeds. Food consumption scores did not improve after the programme. However during the programme participating households moved to more sustainable strategies to cope with food shortages...
Strong economic growth has not turned into poverty reduction in Mozambique due to stagnation in job creation. While the country sees great growth potential from natural resources, this industry is unlikely to generate many jobs as it is not labour...
We examine aid-induced Dutch Disease—after controlling for the effects of remittances and FDI flows—in the context of two North African countries, Morocco and Tunisia. We do so by performing a multivariate time series analysis of aggregated annual...
The World Bank is uniquely positioned to identify and disseminate innovative development practices. Based on his thirty-year experience as a World Bank staff member, the author takes an institutional perspective on the innovation climate at the World...
The purpose of this paper is to capture the impact of foreign capital inflows (which include foreign aid and foreign direct investment) on economic growth in Cameroon. Using the autoregressive distributive lag approach to cointegration and time...
The foreign aid landscape has undergone a paradigm shift in the last few decades, with changes in the behaviour of ‘traditional’ donors and a new focus on selectivity in aid disbursement, as well as ‘new’ donors and South-South co-operation playing...
This paper contributes to the debate on aid effectiveness by looking at the ‘how’ of aid effectiveness. In other words it provides an assessment of whether aid only filled a financing gap or whether it, in addition, helped influence the political...
This study addresses the macroeconomic effect of foreign aid on the factors of growth. Specifically, we examine the effects of foreign aid on capital investment (human capital, physical capital) in sub-Saharan Africa. Our methodological approach...
A dynamic relationship between foreign aid and domestic fiscal variables in Uganda is analysed using a cointegrated vector autoregressive model over the period 1972-2008. Results show that aid is a significant element of long-run fiscal equilibrium...
Commodity price shocks are an important type of external shock and are often cited as a problem for economic growth in sub-Saharan Africa. This paper quantifies the impact of agricultural commodity price shocks using a near vector autoregressive...
There are over 900 million working people who earn less than US$2 a day, while 200 million people are unemployed. Unemployment is a bigger problem in high-income countries, in low-income countries unemployment is rarer as work is essential for...
A number of small, isolated countries are not experiencing the rapid economic growth of larger, more connected economies due to weak governance and isolation. Small, isolated economies require more aid to alleviate poverty than rapidly developing...
24 September 2013 Andy Sumner A series of papers since late 2010 has discussed a shift in the location or 'geography' of global poverty. The shift is...
This paper employs a cointegrated vector autoregressive model to assess the growth effect of aid in Uganda over the period 1972-2008. Results show that aid in Uganda has had both direct and indirect beneficial association with growth; that it is the...
A recent study of 36 sub-Saharan African countries found a positive impact of aid in the absolute majority of these countries. However, for Tanzania and Ghana, two major aid recipients, aid did not seem to have been equally beneficial. This paper...
Three-quarters of the world’s poor (however defined) live in countries classified as middle-income. Donors need not assume their only option is to abandon countries once they cross the arbitrary threshold in per capita income. The thresholds...
Aid co-ordination is a constant theme of discussion among national and international aid agencies in their search for more effectiveness and efficiency in delivering development assistance. This paper seeks to clarify some of the arguments currently...
This paper confirms recent evidence of a positive impact of aid on growth and widens the scope of evaluation to a range of outcomes including proximate sources of growth (e.g., physical and human capital), indicators of social welfare (e.g., poverty...
In a recent article, Nowak-Lehmann, Dreher, Herzer, Klasen, and Martínez-Zarzoso (2012) (henceforth NDHKM) conclude that foreign aid has not had a significant effect on income, based on evidence from panel data potentially covering 131 countries over...
The majority of the world’s poor, by income poverty and multi-dimensional poverty, now live in countries officially classified by the World Bank as middle-income countries. Of course nothing happens when a country crosses a (somewhat) arbitrary...
In the WIDER Working Paper ‘Aid and Investment in Statistics for Africa’ Jeffery I. Round discusses how the effectiveness of aid aimed at improving statistical capacity in Africa can be assessed. He begins by describing the reasons behind the...
It is widely recognized that entrepreneurship is of critical importance to industrial development. Despite this importance we know little about the skills of business owners and managers in developing countries. In the WIDER Working Paper ‘The Role...
Mozambique has achieved remarkable macroeconomic success over recent decades, boasting one of the world’s highest rates of GDP growth. However, absolute poverty remains persistent, spilling over into social unrest. To better understand the link...
The paper considers the experience of the European Investment Bank and addresses policy lessons for developing countries as they seek finance for development. The paper argues that the key lesson for developing countries is that the traditional role...
Theme: Past, 2010-11