Foreign Aid and Development: Lessons Learned and Directions for the Future (Routledge Studies in Development Economics, 17)

415 Pages·2000·2.69 MB·English

by  Finn Tarp

Foreign Aid and Development
‘Here at last is a comprehensive, stimulating, balanced and up-to-date analysis of the current state of
donor debates and disagreements over the roles, effectiveness and future of foreign aid. Its broad
coverage and variety of authors, and its consistently constructive, even when critical, approaches
should make it an obvious starting-point for all students and policy-makers embarking upon work in
this sphere.’
Gerry Helleiner, Centre for International Studies,
University of Toronto
Aid has worked in the past but can be made to work better in the future. In this book, leading international
scholars and experienced aid practitioners reexamine foreign aid and its role in development. Introducing
important new research material, the book combines analysis of post-war development aid policies with an
assessment of current practice and recommendations for future policy.
The book is arranged into four thematic sections. Part I investigates major themes in the evolution of
development doctrine, such as the role of govenment, and challenges the conventional wisdom about the
impact of aid. Part II presents detailed analysis of aid instruments, including technical assistance, project
and programme aid, and food aid. Part III opens up economic perspectives on aid design, and draws
important conclusions on how such factors as environment, public sector reform and gender equality impact
on the relationship between aid and development. Finally, Part IV takes a broader look at some of the most
important contemporary issues in aid policy, such as armed conflict and the emerging global trade
environment.
Foreign Aid and Development will be of essential interest to professional aid practitioners and those
working in development studies, and invaluable to the student of economics or politics looking for new
global perspectives.
Finn Tarp is Associate Professor of Development Economics at the University of Copenhagen. Formerly
with the UN, he worked as an economist in southern Africa from 1978 to 1988. He is the author of Stabilization
and Structural Adjustment: Macroeconomic Frameworks for Analysing the Crisis in Sub-Saharan Africa.
Peter Hjertholm is Assistant Research Professor at the Institute of Economics at the University of
Copenhagen.
Foreign Aid and Development
Lessons Learnt and Directions for the Future
Edited by
Finn Tarp
Editorial Assistant
Peter Hjertholm
London and New York
First published 2000
by Routledge
11 New Fetter Lane, London EC4P 4EE
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
Reprinted 2002
Transferred to Digital Printing 2002
Routledge is an imprint of the Taylor & Francis Group
This edition published in the Taylor & Francis e-Library, 2005.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go towww.eBookstore.tandf.co.uk.”
Editorial material and selection © 2000 Finn Tarp; individual
chapters © the contributors
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the
publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available
from the British Library
Library of Congress Cataloging in Publication Data
Foreign aid and development: lessons learnt and directions for the future/edited by
Finn Tarp; editorial assistant Peter Hjertholm.
p. cm.
Proceedings from conferences held in Copenhagen, Denmark in Oct. 1997 and 1998.
Includes bibliographical references (p. ) and index.
1. Economic assistance—Developing countries—Congresses.
2. Economic development projects—Developing countries—
Congresses. I. Tarp, Finn, 1951– II. Hjertholm, Peter.
HC60.F586 2000
338.91'1722–dc21 00–020816
ISBN 0-203-46176-2 Master e-book ISBN
ISBN 0-203-77000-5 (Adobe eReader Format)
ISBN 0-415-21546-3 (hbk)
ISBN 0-415-23363-1 (pbk)
Contents
List of tables vi
List of figures vii
List of contributors viii
List of acronyms and abbreviations x
Preface xv
Foreign aid and development: summary and synthesis 1
SHERMAN ROBINSON AND FINN TARP
PART I Major themes 11
1 The evolution of the development doctrine and the role of foreign aid, 1950–2000 12
ERIK THORBECKE
2 The role of government in economic development 36
IRMA ADELMAN
3 Foreign aid in historical perspective: background and trends 59
PETER HJERTHOLM AND HOWARD WHITE
4 Aid effectiveness disputed 78
HENRIK HANSEN AND FINN TARP
PART II Aid instruments 100
5 From project aid to programme assistance 101
PAUL MOSLEY AND MARION J.EECKHOUT
6 Technical co-operation 120
CHANNING ARNDT
7 Sector programme assistance 139
OLE MØLGÅRD ANDERSEN
8 Food aid as an aid instrument: past, present and future 152
BJØRG COLDING AND PER PINSTRUP-ANDERSEN
PART III Economic perspectives on aid design 171
v
9 Using aid to reduce poverty 172
JOHN HEALEY AND TONY KILLICK
10 Gender equality and foreign aid 191
LISA ANN RICHEY
11 Foreign aid, development and the environment 210
RASMUS HELTBERG AND UFFE NIELSEN
12 Aid and failed reforms: the case of public sector management 225
ELLIOT J.BERG
13 Foreign aid and private sector development 242
MADS VÁCZY KRAGH, JØRGEN BIRK MORTENSEN, HENRIK
SCHAUMBURG-MÜLLER AND HANS PETER SLENTE
14 Financial sector aid 258
JENS KOVSTED
15 Foreign aid and the macroeconomy 273
PETER HJERTHOLM, JYTTE LAURSEN AND HOWARD WHITE
PART IV Broader issues 290
16 Foreign aid in the emerging global trade environment 291
OLIVER MORRISSEY
17 Aid and conflict 305
TONY ADDISON
18 Aid, conditionality and debt in Africa 318
RAVI KANBUR
19 Political economy of foreign aid 329
RAYMOND F.HOPKINS
References 349
Index 375
Tables
3.1 Schematic overview of main developments in the history of foreign aid 59
3.2 Net ODA disbursements, by type and donor, all donors, 1973–96 63
3.3 Net disbursements of total official and private flows by type, all donors, 1987–97 65
3.4 ODA commitments by sector and purpose, DAC donors, 1973–97 68
3.5 Net ODA disbursements, allocation by geographical region and income groups, all donors, 68
1973–96
3.6 Bilateral ODA commitments, data on financial terms, DAC donors, 1973–96 71
3.7 Bilateral ODA commitments, share of untied aid, DAC donors, selected years 1981–97 72
4.1 Impact of foreign aid and resource flows on savings, investment, and growth 83
4.2 Aid effectiveness results from Papanek regressions 85
4.3 Comparison of recent growth regressions 88
4.4 Growth regressions with polynomial effects of aid and policy 91
A.4.1 (a) Classification of regressions summarised in Table 4.1 97
A.4.1 (b) Classification of regressions summarised in Table 4.1 98
A4.2 Instrumental variable growth regressions with polynomial effects of aid and policy 98
5.1 Structure of bilateral British and multilateral World Bank aid, selected years, 1973–96 101
5.2 Statistical evidence on the effectiveness of foreign aid 102
5.3 Economic policies and average rates of returns for World Bank and IFC projects, 1968–89 104
5.4 Summary of effects of World Bank programme lending, 1980–96 107
6.1 Average shares of total ODA and technical co-operation (TC), by region, 1970–95 125
6.2 Average shares of technical co-operation in net ODA, by region, 1970–95 126
8.1 Implications of food aid for selected variables under different price and market policies 158
9.1 Estimated share of PR interventions in country portfolios of major EU donors, 1997 182
9.2 Nature of impact of poverty 185
9.3 Impact related to degree of direct and indirect targeting 185
A.10.1 WID approaches to gender and foreign aid 207
A.10.2 GAD approaches to gender and foreign aid 208
11.1 Taxonomy of environmentally related transfers according to objective and scope 212
15.1 Expenditure patterns with and without aid 276
15.2 Export diversification, 1980 and 1994 283
16.1 Regional welfare gains of Uruguay Round (UR) reforms 294
16.2 Elements of pre-1980 trade liberalisations 296
16.3 Elements of recent trade liberalisations 298
Figures
1.1 Key interrelationships between development theories, models, objectives, data systems, 13
development policies and strategies and the role of and lessons for foreign aid
1.2 Key interrelationships in the 1950s 15
1.3 Key interrelationships in the 1960s 18
1.4 Key interrelationships in the 1970s 22
1.5 Key interrelationships in the 1980s 26
1.6 Key interrelationships in the 1990s 29
3.1 Net ODA disbursements, DAC donors, 1967–97 64
3.2 Net ODA disbursements as a percentage of donor GNP, 1997 67
3.3(a) Aid diamond, Sweden, 1987 73
3.3(b) Aid diamond, Sweden, 1996 74
3.3(c) Aid diamond, United States, 1987 74
3.3(d) Aid diamond, United States, 1996 74
A.5.1 View of sectoral budget support 115
A.5.2 Instruments within the sector-wide approach 118
6.1 Technical co-operation as a percentage of ODA, by region, 1970–95 128
8.1 Cereal food aid deliveries, selected donors, 1972–98 155
8.2 Total cereal stocks in EU-15, 1994/5–2005/6 165
11.1 Optimal amount of biodiversity conservation 216
13.1 Channels of PSD aid 246
15.1 Griffin’s analysis of aid and savings 276
15.2 The kinked budget constraint 277
19.1 Net ODA disbursements as a percentage of donor GNP, selected donors, 1960–97 332
19.2 Net ODA disbursements, selected donors, 1966–97 334
Contributors
Tony Addison, Lecturer in Economics, University of Warwick, United Kingdom
Irma Adelman, Professor in Graduate School, University of California at Berkeley, USA
Ole Mølgård Andersen, former Chief Economic Adviser (Development Economics), Ministry of
Foreign Affairs (Danida), Denmark
Charming Arndt, Assistant Professor, Department of Agricultural Economics, Purdue University, USA
Elliot J.Berg, Visiting Professor, Centre d’Etudes et de Recherches sur le Développement International
(CERDI), Université d’Auvergne, France
Bjørg Colding, Consultant, International Food Policy Research Institute (IFPRI), Washington, D.C.,
USA
Marion J.Eeckhout, Visiting Researcher, Africa Region, World Bank, former Head of Macroeconomic
Analysis Department, Directorate General for International Cooperation (DGIS), Ministry of Foreign
Affairs, the Netherlands
Henrik Hansen, Assistant Professor, Institute of Economics and Natural Resources, The Royal
Veterinary and Agricultural University and Development Economics Research Group (DERG), Institute
of Economics, University of Copenhagen, Denmark
John Healey, Senior Research Associate, Overseas Development Institute (ODI), United Kingdom
Rasmus Heltberg, Research Fellow, Development Economics Research Group (DERG), Institute of
Economics, University of Copenhagen, Denmark
Peter Hjertholm, Assistant Research Professor, Development Economics Research Group (DERG),
Institute of Economics, University of Copenhagen, Denmark
Raymond F.Hopkins, Richter Professor of Political Science, Department of Political Science, Swarthmore
College, USA
Ravi Kanbur, T.H.Lee Professor of World Affairs and Professor of Economics, Cornell University, USA
Tony Killick, Senior Research Associate, Overseas Development Institute (ODI), United Kingdom
Jens Kovsted, Research Fellow, Development Economics Research Group (DERG), Institute of
Economics, University of Copenhagen, Denmark
Mads Váczy Kragh, Economist, Confederation of Danish Industries, Denmark
Jytte Laursen, Technical Advisor (Economics), Ministry of Foreign Affairs (Danida), Denmark
Oliver Morrissey, Director, Centre for Research in Economic Development and International Trade
(CREDIT), Economics Department, University of Nottingham, United Kingdom
ix
Jørgen Birk Mortensen, Associate Professor, Institute of Economics, University of Copenhagen,
Denmark
Paul Mosley, Professor of Economics, Director, Development Research Centre, University of Sheffield,
United Kingdom
Uffe Nielsen, Research Fellow, Development Economics Research Group (DERG), Institute of
Economics, University of Copenhagen and University Instructor, Institute of Economics and Natural
Resources, The Royal Veterinary and Agricultural University, Denmark
Per Pinstrup-Andersen, Professor, Director General, International Food Policy Research Institute
(IFPRI), Washington, D.C., USA
Lisa Ann Richey, Visiting Assistant Professor, Centre of African Studies, University of Copenhagen,
Denmark
Sherman Robinson, Professor, Director, Trade and Macroeconomics Division, International Food Policy
Research Institute (IFPRI), Washington, D.C., USA
Henrik Schaumburg-Müller, Associate Professor, Department of Intercultural Communication and
Management, Copenhagen Business School, Denmark
Hans Peter Slente, Economist, Confederation of Danish Industries, Denmark
Finn Tarp, Associate Professor, Development Economics Research Group (DERG), Institute of
Economics, University of Copenhagen, Denmark
Erik Thorbecke, H.E.Babcock Professor of Economics & Food Economics, Department of Economics,
Cornell University, USA
Howard White, Fellow, Institute of Development Studies (IDS), University of Sussex, United Kingdom