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Can the world cut poverty in half ? how policy reform and effective aid can meet international development goals

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Author Info
Collier, Paul
Dollar, David

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Abstract

More effective development aid could greatly improve poverty reduction in the areas where poverty reduction is expected to lag: Sub-Saharan Africa, Eastern Europe, and Central Asia. Even more potent would be significant policy reform in the countries themselves. The authors develop a model of efficient aid in which the total volume of aid is endogenous. In particular, aid flows respond to policy improvements that create a better environment for poverty reduction and effective use of aid. They use the model to investigate scenarios-of policy reform, of more efficient aid, and of greater volumes of aid-that point the way to how the world could cut poverty in half in every major region. The fact that aid increases the benefits of reform suggests that a high level of aid to strong reformers may increase the likelihood of sustained good policy (an idea ratified in several recent case studies of low-income reformers). The authors find that the world is not operating on the efficiency frontier. With the same level of concern, much more poverty reduction could be achieved by allocating aid on the basis of how poor countries are as well as on the basis of the quality of their policies. Global poverty reduction requires a partnership in which"third world"countries and governments improve economic policy while"first world"citizens and governments show concern about poverty and translate that concern into effective assistance.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2403.

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Date of creation: 31 Jul 2000
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Handle: RePEc:wbk:wbrwps:2403

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Keywords: Poverty Monitoring&Analysis Services&Transfers to Poor Poverty Reduction Strategies Environmental Economics&Policies Health Economics&Finance Achieving Shared Growth Environmental Economics&Policies Poverty Monitoring&Analysis Services&Transfers to Poor Poverty Assessment

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank. [Downloadable!]
    Other versions:
  2. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March. [Downloadable!] (restricted)
  3. Dollar, David & Easterly, William, 1999. "The search for the key : aid, investment, and policies in Africa," Policy Research Working Paper Series 2070, The World Bank. [Downloadable!]
    Other versions:
  4. Levy, Victor, 1987. "Does Concessionary Aid Lead to Higher Investment Rates in Low-Income Countries?," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 152-56, February. [Downloadable!] (restricted)
  5. Dollar, David & Svensson, Jakob, 1998. "What explains the success or failure of structural adjustment programs?," Policy Research Working Paper Series 1938, The World Bank. [Downloadable!]
    Other versions:
  6. Devarajan, Shantayanan & Hossain, Shaikh I., 1998. "The combined incidence of taxes and public expenditures in the Philippines," World Development, Elsevier, vol. 26(6), pages 963-977, June. [Downloadable!] (restricted)
  7. Killick, Tony, 1991. "The developmental effectiveness of aid to Africa," Policy Research Working Paper Series 646, The World Bank. [Downloadable!]
  8. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jonathan Beynon, 2003. "Poverty Efficient Aid Allocations - Collier/Dollar Revisited," Working Papers 2, Economics and Statistics Analysis Unit (ESAU), Overseas Development Institute. [Downloadable!]
  2. ALi Abdel Gadir Ali, . "Poverty in the Arab Region: A Selective Review," API-Working Paper Series 0402, Arab Planning Institute - Kuwait, Information Center. [Downloadable!]
  3. Sergio Tezanos Vazquez (ICEI and QEH), . "The Geographical Allocation Pattern of Spanish Official Development Assistance," QEH Working Papers qehwps152, Queen Elizabeth House, University of Oxford. [Downloadable!]
  4. Denis Cogneau & David Naudet, 2005. "Who deserves aid? Equality of opportunity, international aid and poverty reduction," Ibero America Institute for Econ. Research (IAI) Discussion Papers 110, Ibero-America Institute for Economic Research. [Downloadable!]
  5. Ali Abdel Gadir Ali, . "Conflict Resolution and Wealth Sharing in Sudan: Towards an Allocation Formula," API-Working Paper Series 0305, Arab Planning Institute - Kuwait, Information Center. [Downloadable!]
  6. Jeff Dayton-Johnson & John Hoddinott, 2003. "Aid, policies and growth, redux," Department of Economics at Dalhousie University working papers archive redux2, Dalhousie, Department of Economics. [Downloadable!]
  7. Jean-Pierre Cling & Denis Cogneau & Jacques Loup & Jean-David Naudet & Jacques Loup & Mireille Razafindrakoto & François Roubaud, 2005. "Development, A question of opportunity? A critique of the 2006 World Development Report, "Equity and Development"," Working Papers DT/2005/15, DIAL (Développement, Institutions & Analyses de Long terme). [Downloadable!]
  8. Denis Cogneau, 2005. "Equality of opportunity and other equity principles in the context of developing countries," Working Papers DT/2005/01, DIAL (Développement, Institutions & Analyses de Long terme). [Downloadable!]
  9. Michael Clemens & Charles Kenny & Todd Moss, 2004. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," Development and Comp Systems 0405011, EconWPA. [Downloadable!]
    Other versions:
  10. Denis Cogneau & Jean-David Naudet, 2004. "Who deserves aid? Equality of opportunity,international aid and poverty reduction," Working Papers DT/2004/10, DIAL (Développement, Institutions & Analyses de Long terme). [Downloadable!]
  11. James, Ang, 2009. "Financial Liberalization and the Aid-Growth Relationship in India," MPRA Paper 14411, University Library of Munich, Germany. [Downloadable!]
  12. Yasheng Huang, 2007. "Ownership Biases and FDI in China: Evidence from Two Provinces," Business and Politics, Berkeley Electronic Press, vol. 9(1), pages 1177-1177. [Downloadable!] (restricted)
  13. Peter Nunnenkamp, 2002. "Shooting the Messenger of Good News: A Critical Look at the World Bank's Success Story of Effective Aid," Kiel Working Papers 1103, Kiel Institute for the World Economy. [Downloadable!]
  14. Ali Abdel Gadir Ali, . "Can the Sudan Reduce Poverty by Half by the Year 2015?," API-Working Paper Series 0304, Arab Planning Institute - Kuwait, Information Center. [Downloadable!]
  15. Katsushi Imai & Raghav Gaiha, University of Delhi, 2003. "Millennium Development Goals, Agricultural Growth and Openness," Economics Series Working Papers 161, University of Oxford, Department of Economics. [Downloadable!]
  16. John Hudson & Paul Mosley, 2007. "Aid Volatility, Policy and Development," Working Papers 2007015, The University of Sheffield, Department of Economics, revised Oct 2007. [Downloadable!]
    Other versions:
  17. Almuth Scholl, 2005. "Aid Effectiveness and Limited Enforceable Conditionality," SFB 649 Discussion Papers SFB649DP2005-054, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany, revised Aug 2005. [Downloadable!]
    Other versions:
  18. Yuan K. Chou & Hayat Khan, 2004. "Explaining Africa's Growth Tragedy: A Theoretical Model of Dictatorship and Kleptocracy," Department of Economics - Working Papers Series 922, The University of Melbourne. [Downloadable!]
  19. Paul Mosley & Abrar Suleiman, 2005. "Budget support, conditionality and poverty," Working Papers 2005012, The University of Sheffield, Department of Economics, revised Jun 2005. [Downloadable!]
  20. Devarajan, Shantayanan & Miller, Margaret J. & Swanson, Eric V., 2002. "Goals for development : history, prospects and costs," Policy Research Working Paper Series 2819, The World Bank. [Downloadable!]
  21. Claessens, Stijn & Cassimon, Danny & Campenhout, Bjorn van, 2007. "Empirical Evidence on the New International Aid Architecture," Proceedings of the German Development Economics Conference, Göttingen 2007 2, Verein für Socialpolitik, Research Committee Development Economics. [Downloadable!]
    Other versions:
  22. Rolf J. Langhammer, 2002. "Halving Poverty by Doubling Aid: How Well Founded is the Optimism of the World Bank?," Kiel Working Papers 1116, Kiel Institute for the World Economy. [Downloadable!]
  23. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2001. "On the Empirics of Foreign Aid and Growth," EPRU Working Paper Series 03-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Sep 2003. [Downloadable!]
    Other versions:
  24. Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY & Jacky AMPROU, 2006. "Aid Selectivity According to Augmented Criteria," Working Papers 200616, CERDI. [Downloadable!]
    Other versions:
  25. Ali Abdel Gadir Ali, . "On Financing Post-Conflict Development in Sudan," API-Working Paper Series 0404, Arab Planning Institute - Kuwait, Information Center. [Downloadable!]
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