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Graduate Programme in International and Development
Economics
Facultés Universitaires Notre-Dame de la Paix,
Namur
Université Catholique de Louvain
Academic Year 2005-2006
The Effectiveness of Aid to
Development
Focus on the Aid-Growth
Literature
François Defourny
Promoter: Professor Jean-Philippe Platteau Tutor: Christian
Tritten
Project presented as part of the requirements for the award of
the Master in
International and Development Economics
Table of Contents
1. Introduction
2. The objectives of aid to development
3. Aid effectiveness
4. The aid-growth relationship
5. The aid-growth literature
5.1. The optimism of Hansen and Tarp (2000)
5.2. The swinging pendulum of Clemens, Radelet and
Bhavnani (2004)
6. New look at the aid-growth literature
6.1. The first part of the literature
6.2. Two turning points for a new aid-growth
literature
6.2.1. Boone: the methodological turning
point
6.2.2. Burnside and Dollar: the ideological turning
point
7. The second part of the literature: reactions to
Burnside and Dollar (1997) 7.1. The indicator for «good» economic
policy
7.2. Sensitivity to model specification
7.3. Other conditioning variables than economic
policy
7.4. Sensitivity due to the data base
7.5. Problem with the definition of aid
7.6. The detrimental consequences of the selectivity
principle
8. Contemporary consensus and controversy
9. Conclusion
Acknowledgments
I wish to thank sincerely Christian Tritten for his precious
availability. His assistance and his advices have been particularly helpful. I
also would like to acknowledge Professor Jean-Philippe Platteau for the
enlightening comments he made. Finally, I am grateful to Professor Michel
Mignolet, Marie-Eve Mulquin and all my colleagues of the CREW who gave me the
necessary flexibility to realise this work.
Introduction
The question of the effectiveness of aid is a particularly
sensitive issue as it may have colossal implications for many developing
countries. However, it is quite difficult to have a clear opinion about the
ability of international assistance to contribute to development. The existing
literature seems to be abundant but very diverging. Between optimistic donor's
rapports, contradictory scientific publications and militant pleas of some NGOs
the question is apparently difficult to answer. We decided to investigate in
this direction to clarify as far as possible this important issue.
After a brief presentation of the diversity of aid objectives,
we will see how the effectiveness of aid to development has been circumscribed
to its impact on economic growth. We will then analyse two articles which tried
to synthesize the existing literature on this topic. Next, we will propose our
own interpretation of this literature. We will discuss the important
shortcomings and failures of the ongoing debate about the efficiency of foreign
assistance. Finally, we will observe the surprising fragility of nonetheless
influent studies with crucial policy implications.
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