Hirano, YumekaOtsubo, Shigeru2014-08-152014-08-152014-08https://hdl.handle.net/10986/19397Aid is good for the poor. This paper uses detailed aid data spanning 60 developing countries over the past two decades to show that social aid significantly and directly benefits the poorest in society, while economic aid increases the income of the poor through growth. This new and unequivocal finding distinguishes the current study from past studies that only utilized aggregate aid data and returned ambiguous results. The paper also confirms that none of the elements of globalization (trade, foreign direct investment, remittances), policies (government expenditure, inflation management), institutional quality, nor other plausibly pro-poor factors have systematic effects on the poor or any other income group, beyond their effects on average incomes. The paper finds that trade and foreign direct investment tend to benefit the richest segments of society more than other income groups. Therefore, the presented evidence suggests that aid can play a crucial role in enabling the poor to benefit more from globalization. These discoveries underscore the need to assist developing countries to find the mix of economic and social aid that jointly promotes the participation of the poor in the development process under globalization. In this manner, aid can make greater strides in spurring development.en-USCC BY 3.0 IGOAGRICULTUREAID ALLOCATIONAVERAGE GROWTHAVERAGE GROWTH RATEAVERAGE INCOMEAVERAGE INCOME GROWTHAVERAGE INCOMESAVERAGE RATEBENCHMARKSCAPITAL FLOWSCIVIL SOCIETYCONDITIONAL CONVERGENCECOUNTRY SPECIFICCROSS-COUNTRY ANALYSESDATA AVAILABILITYDATA SETDEBTDEPENDENT VARIABLEDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT AIDDEVELOPMENT ASSISTANCEDEVELOPMENT ECONOMICSDEVELOPMENT GOALSDEVELOPMENT IMPACTDEVELOPMENT INDICATORSDEVELOPMENT ISSUESDEVELOPMENT POLICYDEVELOPMENT PRACTITIONERSDEVELOPMENT PROCESSDEVELOPMENT STRATEGIESDISTRIBUTIONAL CHANGESDISTRIBUTIONAL EFFECTSDISTRIBUTIONAL IMPACTDOMESTIC RESOURCESECONOMIC ACTIVITIESECONOMIC DEVELOPMENTECONOMIC DOWNTURNSECONOMIC GROWTHECONOMIC HISTORYECONOMIC INTEGRATIONECONOMIC LITERATUREECONOMIC RESEARCHECONOMIC REVIEWECONOMICSELASTICITYEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPIRICAL GROWTH LITERATUREEMPIRICAL MODELSEMPIRICAL RESEARCHEMPIRICAL RESULTSEMPIRICAL STUDIESERROR TERMERROR TERMSESTIMATION RESULTSEXOGENOUS VARIABLESEXPLANATORY POWEREXPLANATORY VARIABLEEXPLANATORY VARIABLESEXPORTSEXTREME POVERTYFINANCIAL CRISISFISCAL POLICYFIXED EFFECTSFOREIGN AIDGDPGINI INDEXGROWTH EMPIRICSGROWTH EQUATIONSGROWTH LITERATUREGROWTH PERFORMANCEGROWTH RATESGROWTH REGRESSIONGROWTH REGRESSIONSGROWTH SPELLSGROWTH THEORYHEAD COUNT RATIOHEADCOUNT RATIOHIGH CORRELATIONHIGH INFLATIONHOUSEHOLD CONSUMPTIONHUMANITARIAN AIDIMPORTSINCOME DISTRIBUTIONINCOME GROUPSINCOME GROWTHINCOME INEQUALITYINCOME LEVELSINCOME SHAREINDUSTRIALIZATIONINEQUALITY REGRESSIONSINFLATION RATEINSTITUTIONAL CAPACITYINTERNATIONAL AIDINTERNATIONAL DEVELOPMENTINTERNATIONAL TRADELABOR MARKETLAGGED VALUESLESS DEVELOPED COUNTRIESLONG RUNLONG-RUN GROWTHLOW INCOMELOW-INCOME COUNTRIESMACROECONOMIC FACTORSMACROECONOMIC MANAGEMENTMACROECONOMIC POLICIESMACROECONOMICSMARGINAL EFFECTMEAN INCOMEMONETARY POLICYNATIONAL INCOMENATURAL LOGARITHMNEGATIVE COEFFICIENTNEGATIVE CORRELATIONNEGATIVE EFFECTNEGATIVE IMPACTNEGATIVE SIGNNET EFFECT0 HYPOTHESISPER CAPITA INCOMEPER CAPITA INCOMESPOLICY CHANGESPOLICY DISCUSSIONSPOLICY MAKERSPOLICY REFORMPOLICY RESEARCHPOLICY STANCEPOLICY VARIABLESPOOR COUNTRIESPOOR COUNTRYPOOR PEOPLEPOSITIVE COEFFICIENTPOSITIVE CORRELATIONPOSITIVE EFFECTPOSITIVE EFFECTSPOSITIVE IMPACTPOSITIVE RELATIONSHIPPOVERTY CHANGEPOVERTY HEADCOUNTPOVERTY INDEXPOVERTY REDUCTIONPOVERTY-GROWTH-INEQUALITY TRIANGLEPRO-POORPROMOTING GROWTHPUBLIC SECTORQUANTILE REGRESSIONSREDUCING INEQUALITYREDUCING POVERTYREGIONAL DUMMIESREGRESSION ANALYSESREGRESSION RESULTSRICH COUNTRIESSAFETY NETSAVINGSSIGNIFICANCE LEVELSIGNIFICANT CORRELATIONSIGNIFICANT IMPACTSIGNIFICANT NEGATIVESOCIAL INFRASTRUCTURESOCIAL SAFETYSTRUCTURAL ADJUSTMENTTARGETINGTECHNOLOGICAL PROGRESSTRADE OPENNESSTRADE POLICIESTRADE POLICYWORLD DEVELOPMENT INDICATORS10.1596/1813-9450-6998