Table of Contents

Handbook on the Economics of Foreign Aid

Handbook on the Economics of Foreign Aid

Edited by B. Mak Arvin and Byron Lew

It would be fair to say that foreign aid today is one of the most important factors in international relations and in the national economy of many countries – as well as one of the most researched fields in economics. Although much has been written on the subject of foreign aid, this book contributes by taking stock of knowledge in the field, with chapters summarizing long-standing debates as well as the latest advances. Several contributions provide new analytical insights or empirical evidence on different aspects of aid. As a whole, the book demonstrate how researchers have dealt with increasingly complex issues over time – both theoretical and empirical – on the allocation, impact, and efficacy of aid, with aid policies placed at the center of the discussion.

Chapter 1: Introduction

B. Mak Arvin and Byron Lew

Subjects: development studies, development economics, economics and finance, development economics, politics and public policy, international relations

Extract

Foreign aid is the transfer of financial or other resources from richer countries to poorer ones that is intended to serve, first and foremost, the recipients’ interests, but which may also be used to pursue other objectives with political, strategic, or commercial imperatives. The origins of aid can be traced to the immediate post-World War II period that saw the creation of the United Nations and the nascent independence movement among former colonies of several countries. The Marshall Plan, under which the United States (US) helped to rebuild a battered Europe, funneled $13.3 billion (about $300 billion in today’s dollars) of assistance to this region. The success of that enterprise prompted the US along with the United Kingdom (UK), and later other Western European countries, to provide aid to poorer nations, especially to many former European colonies that had gained independence. Since then, aid has attempted to fulfill high expectations that are tied not only with development, but also with geo-politics, trade, and a host of other considerations. It would be fair to say that foreign aid today is one of the most important factors in international relations and in the national economy of many countries – as well as one of the most researched fields in economics. Although much has been written on the subject of foreign aid, this work contributes by taking stock of knowledge in the field, with chapters summarizing long-standing debates as well as the latest advances.