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Transcript of Ultimate Software
Three Prevailing Views on Aid
What are your views on the relationship between aid and growth?
China’s Aid to Africa
Overview of China's Aid to Africa
Early Impact Aid Boosts Growth
Mariele Del Villar
The Type of Aid Matters
Aid has No Effect on Growth, and May Actually Undermine Growth.
Aid has a Positive Relationship with Growth on Average(Although not in Every Country), but with Diminishing Returns.
Aid has a Conditional Relationship with Growth, Helping to Accelerate Growth Only Under Certain Circumstances.
Help Africa achieve better development
Create access to Africa’s :
1. Aid for disasters, emergencies, and humanitarian efforts and/or food aid.
2. Aid that might affect growth, but indirectly and over a long period of time.
3. Aid aimed more directly to support growth relatively quickly.
Estimate the model over a four year period.
Factors included growth, possible endogeneity & lags
Positive impact on growth
Does not work everywhere
Large amounts diminish returns
Mean = 2.7% of GDP
1% increase in impact aid produces an additional 0.31 percent annual growth
Effects of Early Impact Aid
Countries with Good Policies
Corruption, rule of law, risk of expropriation or repudiation of contracts & bureaucratic quality.
Relationship between early impact aid and growth is strong.
Countries with higher life expectancy
Aid does not only work in these countries.
Limits to Early Impact Aid
Some counties can absorb more, others less
Aid capacity depends on institution and general health
Strong institutions and higher life expectancy can absorb more
Aid can either undermine or boost growth
Impact of aid is the strongest at early stage
However, early impact aid is limited to institution and life expectancy
Overall, average aid has boosted growth
Not Only in Good Institutions
But in Other Situations
eg: South Korea
Less strong institutions(Still work)
eg: Mozambique &Uganda,
eg: Smallpox, River blindness, Polio, ect…
Tanzania's First Lady Salma Kikwete, Chinese President Xi Jinping, Tanzanian President Jakaya Kikwete and the First Lady of China Peng Liyuan pose at State House in Dar Es Salaam, Tanzania on March 24, 2013.
45.7% of the RMB: 256.29 billion.
Raised questions, its composition,
its goal and nature.
China’s selfish quest
Damage Africa’s efforts
Contribute to a foundation for long-term economic development
GROWTH –ORIENTED AID
Some analysts appears have intense pessimism on aid:
Thank You Very Much!
Efforts to strengthen institutions.
Build human capital.
How to made more effective in supporting growth and development.
Sun, Y.(2014, February).
China’s Aid to Africa: Monster or Messiah?
Retrieved from: http://www.brookings.edu/research/opinions/2014/02/07-china-aid-to-africa-sun
Benign But Not Altruistic
Constraints Are Real,
Not Barrier to Growth
Humanitarian Relief Aid
A U.S. Navy doctor treats patients from tsunami-devastated villages
Environmental Conservation Aid
The Organization for Economic Co-operation and Development is an international economic organization of 34 countries founded in 1961 to stimulate economic progress and world trade.
Organization for Economic Co-operation and Development
Membership organization OECD
Term coined by the Development Assistance Committee (DAC) of the (OECD) to measure aid. It is widely used as an indicator of international aid flow including loans.
Official development assistance (ODA)