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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Aid 'Dependency': A Critique
Author:Collier, PaulISNI
Periodical:Journal of African Economies
Geographic term:Africa
Subjects:development cooperation
international relations
Economics and Trade
Development and Technology
External link:https://jae.oxfordjournals.org/content/8/4/528.full.pdf
Abstract:This paper contests five distinct propositions of what the author terms the 'aid dependency school', which have in common a negative view of aid and a belief that aid causes dependency of poor on rich economies. The first proposition is that Africa has grown more slowly than other continents because it has received more aid relative to its GDP, reducing the incentive to adopt good policies and overwhelming the management capacity of governments. The second proposition is that the analysis of 'welfare dependency' in poor households carries over to aid-receiving countries. The third proposition is that private, not public capital is important and that aid detracts from private investment. The fourth proposition is that volatile aid flows are a source of fiscal instability. The final proposition is that in any case aid budgets are rapidly falling so that African governments must learn to live without aid. After a critical analysis of these elements of the aid dependency belief the author concludes that, subject to a satisfactory policy environment, aid raises growth and the more aid is provided, the faster the growth. Any disincentive effects of aid on national work effort are negligible. Aid has a vital role to play in sustaining growth until private investment increases and in leading-in private investment. Aid has actually been less volatile than government revenue. Finally, contractions in donor budgets have been one-off events. Bibliogr., notes, ref.