wider_0105 - World Institute for Development Economics...

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World Institute for Development Economics Research United Nations University T he World Institute for Development Economics Research was established 20 years ago as the first research and training centre of the United Nations University to offer policy- oriented critical thinking and analysis for the improvement of the living conditions and sustainable development of the poorest of the poor. UNU-WIDER celebrates its 20 th anniversary by organizing an international conference on the theme of ±WIDER Thinking Ahead: the Future of Development Economics² . Some 200 participants from academic, policy, UN, NGO, and other development communities will participate in this conference on 17-18 June 2005 in Helsinki, Finland. Approximately 100 papers on all aspects of the present and the future of development economics are presented and discussed during the two-day conference. The conference highlights new and emerging issues in development, how research can best address these issues, and the promising methodologies that can push the frontiers of research and practice forward. Programme, papers, list of participants, and other details are available at: www.wider.unu.edu Aid and Poverty Reduction by Oliver Morrissey WIDER Thinking Ahead: the Future of Development Economics UNICEF / HQ01-0505 / Shehzad Noorani The present and the future of development economics A id effectiveness has attracted considerable attention in the economic development literature since the late 1990s, both in terms of research publications and policy debates. Something of a consensus is emerging that aid does have a positive impact on growth, although debate remains as to whether or not good policy is necessary to ensure aid effectiveness. Recently, research has begun to examine the impact of aid on poverty reduction. This reflects the increasing emphasis being placed on poverty reduction in policy debates, and demands that the objective of reducing poverty requires an increase in aid to poor countries (e.g. the UN Millennium Project and the report of the Commission for Africa). In this context, what do we know about the effects of aid on reducing poverty? Many will be familiar with arguments along the lines that growth reduces poverty, so if aid is effective in increasing economic growth it will contribute to reducing poverty. Advocates of this argument tend to suggest targeting aid to countries with large numbers of poor people that also display an ability to use aid to increase growth (typically, good policy is accepted as evidence of this ability). This is a reasonable argument (if growth benefits the poor and aid increases growth, then aid benefits the poor), but is not the whole story. On the one hand, growth is not necessarily pro-poor (even if sustained growth is important for sustained poverty reduction). On the other hand, growth is not the only way that aid can benefit the poor; in stagnant economies aid may be able to benefit the poor, and even in a growing economy aid may ensure greater benefits go to
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wider_0105 - World Institute for Development Economics...

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