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Aid and the Millennium Development Goal Poverty Target: How Much is Required and How Should it be Allocated?

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  • Edward Anderson
  • Hugh Waddington

Abstract

This paper uses econometric estimates of the link between aid and economic growth to ask how much additional aid is required to meet the Millennium Development Goal of halving global poverty by 2015, and how this aid should be allocated across countries. It first shows that a large increase in existing aid levels can be justified to halve $1-a-day poverty by 2015, on a country-by-country basis, under the econometric estimates obtained by Hansen & Tarp (2001, Journal of Development Economics, 64, pp. 547-570) and Lensink & White (2001, Journal of Development Studies, 37, pp. 42-65), but not those of Collier & Dollar (2002, European Economic Review, 46, pp. 1475-1500). The paper then shows that, even where an increase in existing aid levels can be justified, a much larger number of people—up to around 70 million—could be lifted out of poverty by 2015 if aid was instead allocated on a poverty-efficient basis. This cautions against the use of a country-by-country target approach when allocating aid across recipient countries.

Suggested Citation

  • Edward Anderson & Hugh Waddington, 2007. "Aid and the Millennium Development Goal Poverty Target: How Much is Required and How Should it be Allocated?," Oxford Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-31.
    • Handle: RePEc:taf:oxdevs:v:35:y:2007:i:1:p:1-31
    DOI: 10.1080/13600810601167561
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    References listed on IDEAS

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    1. Wood, Adrian, 2008. "Looking Ahead Optimally in Allocating Aid," World Development, Elsevier, vol. 36(7), pages 1135-1151, July.
    2. Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, University Library of Munich, Germany.
    3. Clemens, Michael A. & Kenny, Charles J. & Moss, Todd J., 2007. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," World Development, Elsevier, vol. 35(5), pages 735-751, May.
    4. Datt, Gaurav, 1998. "Computational tools for poverty measurement and analysis," FCND discussion papers 50, International Food Policy Research Institute (IFPRI).
    5. William Easterly & Ross Levine & David Roodman, 2003. "New Data, New Doubts: Revisiting "Aid, Policies, and Growth"," Working Papers 26, Center for Global Development.
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    Cited by:

    1. Patrick GUILLAUMONT, 2008. "Adapting Aid Allocation Criteria to Development Goals," Working Papers P01, FERDI.
    2. Patrick Guillaumont & Laurent Wagner, 2014. "Aid Effectiveness for Poverty Reduction: Lessons from Cross‑country Analyses, with a Special Focus on Vulnerable Countries," Revue d’économie du développement, De Boeck Université, vol. 22(HS01), pages 217-261.
    3. Patrick Guillaumont, 2011. "Aid effectiveness for poverty reduction:macroeconomic overview and emerging issues," CERDI Working papers halshs-00554285, HAL.
    4. M. Adnan Kabir, 2020. "Foreign Aid Effectiveness: Evidence from Panel Data Analysis," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 12(3), pages 283-302, September.
    5. Keshab Raj BHATTARAI, 2010. "Problems and Prospects of Nepalese Students in UK: Brain Drain, Immigration or Global Network," EcoMod2010 259600026, EcoMod.
    6. repec:dgr:rugsom:08001 is not listed on IDEAS
    7. Wood, Adrian, 2008. "Looking Ahead Optimally in Allocating Aid," World Development, Elsevier, vol. 36(7), pages 1135-1151, July.
    8. Patrick GUILLAUMONT, 2009. "Aid effectiveness for poverty reduction: macroeconomic overview and emerging issues," Working Papers P05, FERDI.
    9. Sumner, Andy, 2012. "Where Do The Poor Live?," World Development, Elsevier, vol. 40(5), pages 865-877.
    10. Ashok Chakravarti, 2012. "Institutions, Economic Performance and the Visible Hand," Books, Edward Elgar Publishing, number 14751.
    11. Patrick Guillaumont, 2011. "Adapting Aid Allocation Criteria to Development Goals," CERDI Working papers halshs-00556806, HAL.
    12. James Foster & Joel Greer & Erik Thorbecke, 2010. "The Foster–Greer–Thorbecke (FGT) poverty measures: 25 years later," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(4), pages 491-524, December.
    13. James E. Foster & Joel Greer & Erik Thorbecke, 2010. "The Foster-Greer-Thorbecke (FGT) Poverty Measures: Twenty-Five Years Later," Working Papers 2010-14, The George Washington University, Institute for International Economic Policy.

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