Aid the precarious

This page in:

Aid is proven to be more volatile than fiscal revenues, particularly in highly aid-dependent countries; shortfalls in aid and domestic revenue tend to coincide. Pierre-Richard Agénor and Joshua Aizenman in a highly theoretical paper analyze the impact of this unpredictability:

[Aid] may not only potentially exacerbate the impact of macroeconomic shocks […], but it may also contribute to the emergence, or persistence, of a poverty and low-output trap if aid exerts productive effects–either directly (because donors commit to certain projects) or through its impact on public spending.

Join the Conversation

The content of this field is kept private and will not be shown publicly
Remaining characters: 1000