Can foreign aid buy growth?

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Can foreign aid buy growth?
Rochelle Harrison Matthew Plant Hamidat
Popoola Senyo Aidam Sikander Singh Chahal
Tameena Hira

• The effects of corruption and foreign aid on
  developing countries

2
2007 Foreign Aid contribution UK and N.Ireland

• 6,299,418,300

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The Reality

• "Between 1970 and 1998, when aid flows to Africa
  were at their peek, poverty in Africa rose from
  11 to a staggering 66"
• -Dambisa Moyo, Dead Aid

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Can Foreign Aid Buy Growth? - Easterly

• William Easterly (2003)

• Financing Gap

• Burnside and Dollar's Aid, Policies and Growth
  (2000)

• Flaws?

• The Big Idea

• A Real World Perspective

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Corruption and Development - Pranab Bardhan

• 1. Good policies do not necessarily have to be
  moral.

• 2. The only thing worse than a rigid over
  centralised DISHONEST bureaucratic government is
  a rigid over-centralised HONEST one'
• -Samuel P. Huntington

• 3. The concept of Speed Money

• 4. Misuse of foreign Aid policy

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Resources and Incentives to Reform
A Model and some evidence on sub Saharan
African countries

• Low rates of investment and growth can be due to
  poor infrastructure, bad policies and
  institutions.

• The ruling elite will implement "bad policies" to
  sustain their position where aid can become
  ineffectual.

• The proposed Model

• A self interested government concerned with
• a) the welfare of its supporters

b) society's welfare as a whole. 

• Conclusion aid should be conditional

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To what extent does policy in government
influence the effectiveness of foreign aid?
The Question and Verdict...
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Thank you for listening