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Diane Publishing Books
Poverty and Foreign Aid: Evidence from Recent Cross-Country Data
Abuzar Asra (au); Gemma Estrada (au); Yangseom Kim (au); M.G. Quibria (au)
Takes a fresh look, from a macro perspective, at the issue of aid effectiveness. This study adopts poverty reduction, as contrasted from economic growth, as the metric for measuring aid effectiveness. The paper experiments with a number of different regression equations & uses a new panel dataset on poverty. It shows that aid & aid-squared both have significant coefficients but with different signs (positive for aid & negative for aid-squared). Therefore, aid is effective when it is relatively moderate but becomes ineffective when the size of aid exceeds the critical value defined by the absorptive capacity. While the macro policy environ. & the quality of governance have a significant bearing on poverty reduction, aid effectiveness is not contingent on them. Ill.
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