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Halving poverty by doubling aid: how well founded is the optimism of the World Bank?

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  • Langhammer, Rolf J.

Abstract

The article criticizes the World Bank as overy optimistic concerning its ability to raise the effectiveness of aid by concentrating aid on countries with "good" policies. It is shown that aid flows to the main recipient regions yielded the highest correlation to growth when their magnitudes shrank. It is argued that more aid can impair the quality of domestic policies in the recipients (endogeneity problem). The paper instead pleads for a shift of aid policies from country-oriented to issue-oriented aid. An international endowment fund under supranational law should help to finance such issues.

Suggested Citation

  • Langhammer, Rolf J., 2002. "Halving poverty by doubling aid: how well founded is the optimism of the World Bank?," Kiel Working Papers 1116, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1116
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    File URL: https://www.econstor.eu/bitstream/10419/2785/1/kap1116.pdf
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    References listed on IDEAS

    as
    1. Nunnenkamp, Peter, 2002. "Shooting the messenger of good news: a critical look at the World Bank's success story of effective aid," Kiel Working Papers 1103, Kiel Institute for the World Economy (IfW Kiel).
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    8. Younger, Stephen D., 1992. "Aid and the Dutch disease: Macroeconomic management when everybody loves you," World Development, Elsevier, vol. 20(11), pages 1587-1597, November.
    9. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    10. Feyzioglu, Tarhan & Swaroop, Vinaya & Zhu, Min, 1998. "A Panel Data Analysis of the Fungibility of Foreign Aid," The World Bank Economic Review, World Bank, vol. 12(1), pages 29-58, January.
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    Cited by:

    1. Thiele, Rainer, 2003. "Perspektiven der Entwicklungszusammenarbeit," Open Access Publications from Kiel Institute for the World Economy 2899, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    economic growth; poverty reduction; aid effectiveness; policy orientation; ‘Dutch Disease’ effects of aid; development aid;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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