Lofgren, HansNielsen, HannahEzemenari, Kene2012-03-192012-03-192009-06-01https://hdl.handle.net/10986/4151Rwanda is not on track to achieve most of the Millennium Development Goals at a time when hopes for scaled-up aid are mixed with concerns that, in the context of the global economic crisis, aid instead will be scaled down. This paper analyzes the effects of alternative scenarios for grant aid, government spending allocations (between infrastructure, agriculture, and human development), and government efficiency. The authors use an economy-wide model for development strategy analysis, Maquette for Millennium Development Goal Simulations. Under a plausible scenario for increased aid, annual growth in gross domestic product increases by as much as 0.6 percentage points relative to a baseline with a growth rate of 6 percent; by 2020, the headcount poverty rate declines to 32 percent, 3 percentage points lower than for the baseline. A plausible scenario for reduced aid leads to a symmetric growth reduction but a more pronounced increase in poverty, at 40 percent in 2020. When aid increases, the most positive growth and poverty reduction impacts occur if spending increases are allocated to infrastructure and agriculture; progress in human health and education is significant but weaker than if additional spending is focused on these areas. Given synergies and diminishing marginal returns from expansion in a limited area, the scenarios that may appear most attractive and politically feasible have a broad and balanced expansion across government functions, promoting both growth and human development.CC BY 3.0 IGOACCOUNTINGADVERSE EFFECTSAGRICULTURAL SECTORAGRICULTUREANNUAL GROWTHBALANCE OF PAYMENTSBANK POLICYBASE YEARBENCHMARKBORROWINGCALCULATIONCAPITA INCOMESCAPITAL STOCKSCHILD MORTALITYCOMMODITIESCOMMODITYCOMMODITY PRICESCOMPETITIVENESSCONSTANT PRICESCONSUMERCONSUMPTION GROWTHCONTRIBUTIONCONTRIBUTIONSCOST INCREASESCURRENT ACCOUNTCURRENT ACCOUNT DEFICITDATA AVAILABILITYDEBTDEBT STOCKDECENTRALIZATIONDEPRECIATIONDEVELOPMENT INDICATORSDEVELOPMENT POLICYDEVELOPMENT STRATEGIESDEVELOPMENT STRATEGYDIVERSIFICATIONDOMESTIC BORROWINGEARNINGSECONOMIC CONDITIONSECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC MANAGEMENTECONOMIC PERFORMANCEECONOMIC SHOCKSEDUCATIONAL INDICATORSEDUCATIONAL SERVICESELASTICITYENVIRONMENTAL SUSTAINABILITYEQUIPMENTEXCHANGE RATEEXPORT GROWTHEXPORT PROMOTIONEXPORTSEXTENSION SERVICESEXTERNAL DEBTEXTERNAL FINANCINGEXTREME POVERTYFINANCESFINANCIAL MANAGEMENTFINANCIAL SUPPORTFISCAL DEFICITFIXED INVESTMENTFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN INTERESTFULL EMPLOYMENTGDP PER CAPITAGINI COEFFICIENTGLOBAL ECONOMYGOVERNMENT ACCOUNTSGOVERNMENT BORROWINGGOVERNMENT DEBTGOVERNMENT FINANCESGOVERNMENT FINANCINGGOVERNMENT INVESTMENTGOVERNMENT INVESTMENTSGOVERNMENT POLICIESGOVERNMENT POLICYGOVERNMENT SPENDINGGROSS DOMESTIC PRODUCTGROWTH PATTERNGROWTH PERFORMANCEGROWTH RATEGROWTH RATESHEADCOUNT POVERTYHEALTH CENTERSHEALTH OUTCOMESHIGH GROWTHHIGH GROWTH RATEHOLDINGHOUSEHOLD INCOMESHOUSEHOLD SPHEREHOUSEHOLD SURVEYSHOUSEHOLD WELFAREHUMAN CAPITALHUMAN CAPITAL DEVELOPMENTHUMAN DEVELOPMENTHUMAN HEALTHHUMAN RESOURCEIMPERFECT SUBSTITUTESIMPORT TARIFFSINCOMESINFANTINFANT MORTALITYINFLATIONINFLATION RATESINTEREST PAYMENTSINTERNATIONAL BANKINVESTINGINVESTMENT CLIMATEINVESTMENT CLIMATE ASSESSMENTLABOR FORCELABOR MARKETLABOR MARKETSLEVEL OF DEBTLEVELS OF EDUCATIONLIMITED RESOURCESLIVING STANDARDLIVING STANDARDSLOG-NORMAL DISTRIBUTIONLONG-RUN GROWTHLOW-INCOMELOW-INCOME COUNTRIESMACROECONOMIC STABILITYMAINTENANCE COSTSMARGINAL BENEFITSMARGINAL COSTMARGINAL COSTSMARGINAL RETURNSMARKET PRICESMATERNAL HEALTHMATERNAL MORTALITYMATERNAL MORTALITY RATEMILLENNIUM DEVELOPMENT GOALMILLENNIUM DEVELOPMENT GOALSMONETARY FUNDMORTALITY RATENATIONAL POVERTY LINENEGATIVE SHOCKSOFFICIAL DEVELOPMENT ASSISTANCEOPEN ECONOMYORGANIZATIONAL STRUCTUREPOLICY MAKERSPOLICY OPTIONSPOLICY RESEARCHPOLICY RESEARCH WORKING PAPERPOLITICAL ECONOMYPOPULATION GROWTHPOPULATION SHAREPOSITIVE EFFECTSPOVERTY RATEPOVERTY RATESPOVERTY REDUCTIONPOVERTY REDUCTION STRATEGYPRICE CHANGESPRICE INCREASESPRIMARY SCHOOLPRIMARY SCHOOLINGPRIVATE CAPITALPRIVATE CAPITAL STOCKPRIVATE INVESTMENTPRIVATE SAVINGSPRODUCTIVITYPRODUCTIVITY GROWTHPROGRESSPROTECTIONISMPROVISION OF EDUCATIONPUBLIC EXPENDITUREPUBLIC FINANCEPUBLIC INFRASTRUCTUREPUBLIC SECTORPUBLIC WORKSQUALITY OF EDUCATIONREAL EXCHANGE RATEREAL GDPRECURRENT EXPENDITUREREMITTANCESRESERVESRESPECTRETURNSRURAL AREASSAFE DRINKING WATERSALESSANITATIONSANITATION FACILITIESSAVINGSSAVINGS RATESECONDARY EDUCATIONSECONDARY SCHOOLINGSECTOR REFORMSSERVICE DELIVERYSIGNIFICANT IMPACTSKILLED LABORSKILLS DEVELOPMENTSOCIAL PROTECTIONSTOCK DATASTOCKSSTRUCTURAL CHANGETAXTECHNICAL ASSISTANCETERTIARY EDUCATIONTOTAL REVENUETRADE BALANCETRADE DEFICITTRANSPORTATIONTRUST FUNDSUNIVERSAL PRIMARY EDUCATIONUTILITY MAXIMIZATIONVALUABLEVALUE ADDEDVULNERABILITYWAGEWAGESWATER MANAGEMENTWorld Bank10.1596/1813-9450-4958