Publication:
Aid and Reform in Africa : Lessons from Ten Case Studies

Loading...
Thumbnail Image
Files in English
English PDF (34.63 MB)
3,943 downloads
English Text (1.64 MB)
1,014 downloads
Published
2001-04
ISSN
Date
2013-06-13
Author(s)
Dollar, David R.
Holmgren, Torgny
Abstract
This book synthesizes the findings from ten case studies that investigate whether, when, and how foreign aid affected economic policy in Africa, and reveals the range of African policy experience. Results varied enormously, for example, while Ghana and Uganda were successful reformers that grew rapidly reducing poverty, Cote d'Ivoire and Ethiopia have shown significant reform recently, but its sustainability remains to be seen, and, in other countries, policies changed little, or even worsened. Based on the World Bank's Country Policy and Institutional Assessment, the study relates foreign aid in the 1990s, to a measure of overall economic policy, a broad measure that covers macroeconomic management, as well as effectiveness of the public sector in providing essential services for growth, and poverty reduction. In assessing aid, and reform policy, the study subdivides these countries in three groups: the post-socialist reformers (Ethiopia, Mali and Tanzania); the mixed reformers (Cote d'Ivoire, Kenya and Zambia), and the non-reformers (The Democratic Republic of Congo - Zaire - and Nigeria). Although defining "good policy", and how to measure it may be controversial, research and experience established a fair knowledge: absence of high inflation, functioning foreign exchange, openness to foreign trade, effective rule of law, and delivery of key services. Conclusions stipulate that key to successful reform, is a political movement for change; that key to beneficial aid is its disbursement alongside actual policy improvements; and, that technical assistance, and policy dialogue should continue a high level of finance in productive environments.
Link to Data Set
Citation
Dollar, David R.; Devarajan, Shantayanan; Holmgren, Torgny. Devarajan, Shantayanan; Dollar, David R.; Holmgren, Torgny, editors. 2001. Aid and Reform in Africa : Lessons from Ten Case Studies. © World Bank. http://hdl.handle.net/10986/13894 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Other publications in this report series
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    Potential Benefits and Risks of Increased Aid Flows to Burundi
    (World Bank, Washington, DC, 2010-01) Nielsen, Hannah; Madani, Dorsati
    Burundi has experienced a significant increase in aid flows in recent years. Currently, about half of the budget is funded by aid, mostly grants. The high external assistance has, however, not yet translated into high and sustainable growth rates. This paper analyzes (i) the policy response of the government to the aid surge and its impact on macroeconomic variables; and (ii) the allocation of external assistance and its implications for growth. Since not all aid affects economic development in the same way, aid disbursements are disaggregated by sector as well as by their lag in impacting growth. The analysis shows that Burundi has mostly spent and absorbed increased aid flows, but has until now not suffered significantly from the possible negative effects of an appreciating exchange rate and the related loss of competitiveness, but the possibility of a Dutch disease effect remains a risk. The country s low growth performance, despite high aid inflows, is not necessarily a sign that aid is ineffective or exceeding Burundi s absorptive capacity. It reflects that a large share of aid has been allocated to either humanitarian and emergency aid or long-run growth enhancing sectors. Therefore, the lagged impact of aid on economic growth is not yet visible. Furthermore, the composition of the domestically financed budget is biased toward recurrent spending, and therefore not directly growth enhancing. In addition, low and often unpredictable aid disbursement ratios aggravate the bias away from investment and toward government consumption. To boost short-term growth, the share of aid allocated to productive sectors, such as agriculture and the supporting infrastructure, needs to be increased. Firm commitments and timely disbursements of aid by donors are essential and the Government of Burundi needs to strengthen its capacity and mechanisms for donor coordination.
  • Publication
    The World Bank Annual Report 2001
    (Washington, DC, 2001) World Bank
    This Annual Report covers the period from July 1, 2000, to June 30, 2001, and details the World Bank strategy for meeting the poverty challenge. After the Introduction, Chapter 1 provides an overview of Bank activities in 2001 that focused on multi-dimensional support, improved development effectiveness, increased funding volume, formalized the country business model, evolved country assistance strategies by preparing them in consultation, developed investment vehicles to support low-income countries, created a task force to consider the response to the needs of middle-income countries, developed an innovative IBRD and IDA program and project lending to support strong national programs, assessment of the Strategic Compact, the use of the World Bank Institute to empower through knowledge and setting out a strategic framework for future directions. Chapter 2 describes the role of the Board of Executive Directors. Chapter 3 examines the thematic issues the Bank is tackling, such as addressing the social, institutional, and economic dimensions of poverty; investing in people; supporting private sector development; building strong financial systems; and building effective legal and judicial systems. Chapter 4 discusses the Bank's role in fighting poverty and aiding development region by region. Chapter 5 looks at Bank project performance. Chapter 6 focuses on Bank partnerships, Chapter 7 sums up approved projects, and Chapter 8 provides organizational information. This report is in 2 volumes. Volume 2 comprises the complete Management's Discussion and Analysis, audited financial statements, and appendices.
  • Publication
    Poverty Reduction Support Credits
    (Washington, DC: World Bank, 2010-09) Grawe, Roger
    Vietnam, a one-party socialist state dominated by the Communist Party of Vietnam, has in recent years moved towards a pragmatic growth-oriented approach to economic policy. Early reform measures in 1986 with the doi moi, or new way, introduced a series of market-oriented reforms in industry and trade, as well as agriculture. The collapse of the Soviet Union in 1989 hastened the pace of reform, as the authorities intensified monetary, banking, and structural reforms and set the stage for substantial trade and investment liberalization, and as Vietnam's arrears with the International Monetary Fund (IMF) were settled in 1993. Key lessons that emerge from the Vietnam study include: a) the Poverty Reduction Support Credit (PRSC) process is strengthened through rigorous analytic underpinnings (for example, Vietnam development reports, public expenditure reviews, and other analytical and advisory services) that provide a shared vision of the development agenda and a menu of policy actions linked to the thematic pillars of the poverty reduction strategy; b) even in a context of high government commitment, fostering a connection to an external anchor (such as world trade organization accession) can help maintain momentum in the PRSC process and reform generally; c) PRSCs can function as an effective complement to, and catalyst for, sector operations including the development of sector-wide approaches and sector budget support; and d) with large numbers of international and government participants, it becomes increasingly important for both Government and the Bank that responsibilities for coordinating inputs and consultation and maintaining a policy overview be closely linked, defined, and adequately funded.
  • Publication
    Egypt - Positive Results from Knowledge Sharing and Modest Lending : An IEG Country Assistance Evaluation 1999-2007
    (Washington, DC: World Bank, 2009) Independent Evaluation Group
    This country assistance evaluation reviews World Bank support to the Arab Republic of Egypt from fiscal 1999 through 2007. Egypt's economic performance over the period improved substantially. This was particularly true after 2004, following improvements in economic management, an increase in the pace of structural reforms, and correction of the exchange rate. Gross domestic product growth averaged about five percent over the period, rising to almost seven percent in 2006 and 2007. Human development indicators improved significantly. However, progress in poverty reduction has been disappointing, with a deterioration in the poverty headcount, particularly in Upper Egypt. Future Bank strategy needs to reflect Egypt's middle-income status by including a flexible lending program and an emphasis on knowledge services, including reimbursable technical assistance. The Bank can further strengthen the partnership by focusing on: (i) the persistent issue of poverty and inequality; (ii) analytic work on macroeconomic analysis and income disparities and its improved dissemination; (iii) further financial sector reforms and promoting continued reforms in systems that indirectly combat corruption; and (iv) sectoral strategies and policy and institutional reforms in infrastructure and energy.
  • Publication
    Aid, Growth, and Real Exchange Rate Dynamics
    (World Bank, Washington, DC, 2008-01) Page, John; Devarajan, Shantayanan; Robinson, Sherman; Go, Delfin S.; Thierfelder, Karen
    Devarajan, Go, Page, Robinson, and Thierfelder argued that if aid is about the future and recipients are able to plan consumption and investment decisions optimally over time, then the potential problem of an aid-induced appreciation of the real exchange rate (Dutch disease) does not occur. In their paper, "Aid, Growth and Real Exchange Rate Dynamics," this key result is derived without requiring extreme assumptions or additional productivity story. The economic framework is a standard neoclassical growth model, based on the familiar Salter-Swan characterization of an open economy, with full dynamic savings and investment decisions. It does require that the model is fully dynamic in both savings and investment decisions. An important assumption is that aid should be predictable for intertemporal smoothing to take place. If aid volatility forces recipients to be constrained and myopic, Dutch disease problems become an issue.

Users also downloaded

Showing related downloaded files

No results found.