Roads out of poverty? Assessing the links between aid, public investment, growth, and poverty reduction

Pierre Richard Agénor, Nihal Bayraktar, Karim El Aynaoui

Research output: Contribution to journalArticle

33 Scopus citations

Abstract

This paper presents a dynamic macroeconomic model that captures key linkages between foreign aid, public investment, growth, and poverty. Public capital is disaggregated into education, core infrastructure, and health. Dutch disease effects associated with aid are accounted for by endogenizing changes in the relative price of domestic goods. The impact of shocks on poverty is assessed through partial elasticities and household survey data. The model is calibrated for Ethiopia and changes in the level of nonfood aid are simulated. The amount by which (nonfood) aid should increase to reach the poverty targets of the Millennium Development Goals is also calculated, under alternative assumptions about the degree of efficiency of public investment.

Original languageEnglish (US)
Pages (from-to)277-295
Number of pages19
JournalJournal of Development Economics
Volume86
Issue number2
DOIs
StatePublished - Jun 2008

All Science Journal Classification (ASJC) codes

  • Development
  • Economics and Econometrics

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