Aid Allocation and Poverty Reduction

Reallocating aid is politically difficult, but it may be considerably less difficult than quadrupling aid budgets, which is what the authors estimate would be necessary to achieve the same impact on poverty reduction with existing aid allocations. This paper - a joint product of the Office of the Di...

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Bibliographic Details
Main Author: Dollar, David
Other Authors: Collier, Paul
Format: eBook
Language:English
Published: Washington, D.C The World Bank 1999
Subjects:
War
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
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100 1 |a Dollar, David 
245 0 0 |a Aid Allocation and Poverty Reduction  |h Elektronische Ressource  |c Dollar, David 
260 |a Washington, D.C  |b The World Bank  |c 1999 
300 |a 46 p. 
653 |a War 
653 |a Recipient Countries 
653 |a Respect 
653 |a Development Efforts 
653 |a Poor People 
653 |a Pro-Poor Growth 
653 |a Policy Level 
653 |a Sustainable Growth 
653 |a Health, Nutrition and Population 
653 |a Policies 
653 |a Quantitative Measures 
653 |a Rural Development 
653 |a Economic Growth 
653 |a Living Standards 
653 |a Rural Poverty Reduction 
653 |a Poverty Reduction 
653 |a Services and Transfers to Poor 
653 |a Sectoral Policies 
653 |a Rule Of Law 
653 |a National Policy 
653 |a Poverty 
653 |a Population Policies 
653 |a Domestic Poverty 
653 |a Emergencies 
653 |a Elimination Of Poverty 
653 |a Level Of Poverty 
700 1 |a Dollar, David 
700 1 |a Collier, Paul 
700 1 |a Collier, Paul 
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520 |a Reallocating aid is politically difficult, but it may be considerably less difficult than quadrupling aid budgets, which is what the authors estimate would be necessary to achieve the same impact on poverty reduction with existing aid allocations. This paper - a joint product of the Office of the Director, and Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to examine aid effectiveness. The authors may be contacted at pcollier@worldbank.org or ddollar@worldbank.org 
520 |a They find the actual allocation of aid to be radically different from the poverty-efficient allocation. In the efficient allocation, for a given level of poverty, aid tapers in with policy reform. In the actual allocation, aid tapers out with reform. In the efficient allocation, aid is targeted disproportionately to countries with severe poverty and adequate policies - the type of country where 74 percent of the world's poor live. In the actual allocation, such countries receive a much smaller share of aid (56 percent) than their share of the world's poor. With the present allocation, aid is effective in sustainably lifting about 30 million people a year out of absolute poverty. With a poverty-efficient allocation, this would increase to about 80 million people. Even with political constraints introduced to keep allocations for India and China constant, poverty reduction would increase to about 60 million.  
520 |a In the efficient allocation of aid, aid is targeted disproportionately to countries with severe poverty and adequate policies. For a given level of poverty, aid tapers in with policy reform. In the actual allocation of aid, aid tapers out with reform. - Aid now lifts about 30 million people a year out of absolute poverty. With a poverty-efficient allocation, the same amount of aid would lift about 80 million people out of poverty. Collier and Dollar derive a poverty-efficient allocation of aid and compare it with actual aid allocations. They build the poverty-efficient allocation in two stages. First they use new World Bank ratings of 20 different aspects of national policy to establish the current relationship between aid, policies, and growth. Onto that, they add a mapping from growth to poverty reduction, which reflects the level and distribution of income. They compare the effects of using headcount and poverty-gap measures of poverty.