The Contribution of Foreign Assistance to Agricultural Development

In recent years, national and international aid agencies have allocated a considerable amount of resources to the agricultural sector of less developed countries. The purpose of the research reported in this article is to determine whether these resources have made an identifiable contribution to the recipients' agricultural production. To answer this question, a cross sectional sample of 13 major aid receiving countries was investigated. Changes in agricultural production between two three-year periods (1960–1962 and 1964–66) were statistically related to the increase in land area cultivated, the increase in labor employed, and agricultural aid per hectare. The form of the statistical relationship was derived from a Cobb-Douglas production function. Aid to agriculture was subdivided into three categories: (a) aid in financing agricultural inputs, such as fertilizer; (b) technical assistance; and (c) aid to finance facilities to produce agricultural inputs (e.g., fertilizer plants). The analysis showed that there was a statistically significant relationship between aid-financed inputs and agricultural output. This type of aid explained nearly one-third of the average 15 percent increase in agricultural output experienced by the 13 countries. On the other hand, there were no statistically significant relationships between the other two types of aid and agricultural production; but this is not surprising, considering the short period of time investigated.