Econ171-EEP151_Topic_12_Foreign_Aid.pdf

Econ171-EEP151_Topic_12_Foreign_Aid.pdf - Econ 171/EEP 151...

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Econ 171/EEP 151: Development Economics Topic 12 – Foreign Aid David Roland-Holst University of California, Berkeley Tuesday, Thursday, 11-12:30 A1 Hearst Field Annex
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2 14 November 2017 Contents Some History Evolution of Foreign Aid Destination and Sectoral content of Foreign Aid Fungibility of Foreign Aid Aid Effectiveness The Practice of Foreign Aid The debate on Foreign Aid
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3 14 November 2017 Successful Aid: The Marshall Plan The Marshall Plan (1948-1953) transferred about $13.6 Billion dollars (about $88 Billion in 1997 dollars) to 16 European countries. By 1952, the economy of each country had surpasses pre-war levels. Political motivations (anti-communism) were important – Greece and Turkey were first countries to receive aid. Funds were used to import goods (food and fuel initially but later machinery and infrastructural needs). Plan also provided technical assistance to enable local industry achieve higher productivity levels. Plan came with conditionalities: Currency convertibility, trade openness (towards US), reductions in public spending. Disagreement about the precise role of plan in improving welfare (directly alleviating resource shortages vs. creating conducive policy environment).
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4 14 November 2017 Aid History The International Bank for Reconstruction and Development (World Bank) and IMF created in 1944 and initially meant to aid reconstruction in Japan and Europe. WB Focus on poor countries only began around 1968. Overall, overseas development assistance from OECD countries has totalled more than $3 trillion since 1970 (about $128 billion in 2010). Currently the US provides the most aid. Through the 1990s Europe (France, Germany) set the pace. Overseas Development Assistance (ODA) from 29 members of OECD’s DAC compiled regularly. Non OECD-DAC members (e.g. Saudi Arabia, China) also provide aid. Chinese ODA increased six-fold to $2 billion in 2013.
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5 14 November 2017 How much Aid? How much ODA do different OECD-DAC countries provide? What is the variation in donor provision over time? How has it changed over time? In 1970 UN General Assembly recommended that rich countries devote ≈ .7% of GDP toward Overseas Development Assistance (ODA) aka Foreign Aid. Call was reiterated as part of the MDG initiative in 2000.
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6 14 November 2017 Aid Numbers: Top Donors Qian (2014) Group of top donors stable over time. Top donor generally gives much more than 2nd.
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7 14 November 2017 Aid as a Percentage of Donor Income
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8 14 November 2017 Aid Numbers: Top Recipients
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9 14 November 2017 Do Poor Countries Receive More Aid? Per Capita ODA by Recipient Country Incomes
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10 14 November 2017 Do Poor Countries Receive More Aid? Total Aid by Recipient Income Level
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11 14 November 2017 Who Receives Aid?
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