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 6: MDGs and international cooperation: an analysis of private and public aid and the role of education

Maria-Carmen Guisan, Eva Aguayo and Pilar Exposito

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


The United Nations’ Millennium Development Goals (MDGs), among other factors, have increased interest in the challenges facing international cooperation in development to alleviate poverty and promote sustainable development. Many debates have focused on the role of official development aid (ODA). At the same time, it is also important to analyze other channels of international cooperation, including the role of private aid, foreign investment, trade and other factors relevant to development. As stated in the report by the US Agency for International Development (USAID, 2014): Thirty years ago, 70% of resource flows from the US to the developing world came in the form of ODA. Today, 80% of those resource flows come from foreign direct investment, private donations, remittances, and other non-governmental sources. ODA accounts for only 14% of these resource flows today, underscoring the increasing importance of the private sector in the development process. Adelman et al. (2013) present an interesting report on global philanthropy and remittances, based on data from the Organisation for Economic Co-operation and Development (OECD), the World Bank and other sources. They estimate that the US contribution to developing countries in the year 2011 was around $278.5 billion, where ODA accounted only for $30.9 billion (11 percent), while private philanthropy accounted for $39 billion (14 percent), remittances for $100.2 billion (36 percent) and private capital flows for $108.4 billion (39 percent).

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