Foreign Aid and the Poverty Trap: Increasing Aid Effectiveness by Limiting

Yuchen Feng; Luying Meng; Yatong Lv

doi:10.54254/2753-7048/46/20230585

Research Article

Open access

Published on 19 April 2024

Download pdf

Feng,Y.;Meng,L.;Lv,Y. (2024). Foreign Aid and the Poverty Trap: Increasing Aid Effectiveness by Limiting. Lecture Notes in Education Psychology and Public Media,46,41-47.

Export citation

Foreign Aid and the Poverty Trap: Increasing Aid Effectiveness by Limiting

Yuchen Feng *^,1, Luying Meng ², Yatong Lv ³

¹ Xi'an Jiaotong-Liverpool University
² University of Exeter
³ Golden Apple Gincheng No.1 secondary school

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/2753-7048/46/20230585

Abstract

This paper explores the practical effectiveness of foreign aid in eradicating poverty in recipient countries. In recent years, poverty traps have become a more common problem in poor countries. The population of many developing countries is in multidimensional poverty, not only facing poor living conditions, but from a macro perspective, countries are difficult to get out of the cycle of poverty due to lack of capital, technology and reasonable institutions. Foreign aid, on the other hand, mainly provides support and help to poor countries in response to these problems, which are also the main aspects of its effectiveness analyzed in this paper. Based on the existing empirical results and theoretical analysis of foreign aid, this paper holds that the effectiveness of foreign aid will change due to the different objective conditions of recipient countries. In general, while it is obvious that foreign aid can promote economic development and infrastructure construction in poor countries, the effectiveness of foreign aid is weakened to some extent due to corruption and unreasonable distribution system in some recipient countries. Therefore, foreign aid should be targeted limited according to the existing problems of recipient countries to improve its effectiveness.

Keywords

Economics and Development, Development Policy, Foreign aid, Poverty trap

View pdf

References

[1]. Easterly, W. (2006) “Reliving the 1950s: the big push, poverty traps, and takeoffs in economic development,” Journal of Economic Growth, 11(4), pp. 289–318. Available at: https://doi.org/10.1007/s10887-006-9006-7.

[2]. United Nations (2022) 2022 Global Multidimensional Poverty Index (MPI). Available at: https://hdr.undp.org/content/2022-global-multidimensional-poverty-index-mpi#/indicies/MPI.

[3]. Azariadis, C. and Stachurski, J. (2005) “Chapter 5 Poverty Traps,” in Handbook of economic growth, pp. 295–384. Available at: https://doi.org/10.1016/s1574-0684(05)01005-1.

[4]. United Nations (2005) Human Development Report 2005. Available at: https://hdr.undp.org/content/human-development-report-2005.

[5]. Mahembe, E. and Odhiambo, N.M. (2019a) “Foreign aid and poverty reduction: A review of international literature,” Cogent Social Sciences, 5(1), p. 1625741. Available at: https://doi.org/10.1080/23311886.2019.1625741.

[6]. Davis, A. et al. (2008) “How China delivers development assistance to Africa.” Available at: https://agris.fao.org/agris-search/search.do?recordID=XF2016046929.

[7]. Radelet, S. (2017) “Once more into the breach: Does foreign aid work?” | Brookings. Available at: https://www.brookings.edu/articles/once-more-into-the-breach-does-foreign-aid-work/.

[8]. Huang, M. and Wang, J. (2022) “International aid evaluation system and China’s foreign aid,” Overseas Investment & Export Credits, (06),7-10.

[9]. Page, L. and Pande, R. (2018) “Ending Global Poverty: Why Money Isn’t Enough.,” The Journal of Economic Perspectives, 32(4), 173–200. Available at: https://www.jstor.org/stable/26513501.

[10]. Moyo, D. (2008) Dead Aid: Why aid is not working and how there is a better way for Africa. Available at: https://www.carnegiecouncil.org/studio/multimedia/20090409/0142.html/_res/id=sa_File1/Dead_Aid.pdf.

[11]. Carter, M.R. and Barrett, C. (2006) “The economics of poverty traps and persistent poverty: An asset-based approach,” Journal of Development Studies, 42(2), pp. 178–199. Available at: https://doi.org/10.1080/00220380500405261.

[12]. Arndt, C., Jones, S. and Tarp, F. (2015) “Assessing Foreign Aid’s Long-Run contribution to growth and development,” World Development, 69, pp. 6–18. Available at: https://doi.org/10.1016/j.worlddev.2013.12.016.

[13]. Mahembe, E. and Odhiambo, N.M. (2019b) “Foreign aid, poverty and economic growth in developing countries: A dynamic panel data causality analysis,” Cogent Economics & Finance, 7(1), p. 1626321. Available at: https://doi.org/10.1080/23322039.2019.1626321.

[14]. Aghion, P. and Bolton, P. (1997) “A Theory of Trickle-Down Growth and Development,” The Review of Economic Studies, 64(2), p. 151. Available at: https://doi.org/10.2307/2971707.

[15]. Hammar, O. and Waldenström, D. (2017) “Global Earnings Inequality, 1970–2015,” Social Science Research Network [Preprint]. Available at: https://doi.org/10.2139/ssrn.2971378.

[16]. Schudel, C.J.W. (2007) “Corruption and Bilateral Aid: A Dyadic Approach,” The Journal of Conflict Resolution, 52(4), pp. 507–526. Available at: http://www.jstor.org/stable/27638623.

[17]. Mauro, P. (1997) Why Worry about Corruption. Available at: https://www.amazon.com/Worry-about-Corruption-Economic-Issues/dp/155775635X.

[18]. Quibria, M.G. (2014) “Aid effectiveness: research, policy and unresolved issues,” Development Studies Research, 1(1), pp. 75–87. Available at: https://doi.org/10.1080/21665095.2014.922890.

Cite this article

Feng,Y.;Meng,L.;Lv,Y. (2024). Foreign Aid and the Poverty Trap: Increasing Aid Effectiveness by Limiting. Lecture Notes in Education Psychology and Public Media,46,41-47.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of the International Conference on Global Politics and Socio-Humanities

Conference website: https://www.icgpsh.org/

ISBN：978-1-83558-361-6(Print) / 978-1-83558-362-3(Online)

Conference date: 13 October 2023

Editor：Enrique Mallen, Javier Cifuentes-Faura

Series: Lecture Notes in Education Psychology and Public Media

Volume number: Vol.46

ISSN：2753-7048(Print) / 2753-7056(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).