Foreign Aid in Africa is Productive

The current policy environment in Africa provides a productive ground for foreign aid, Shanta Devarajan writes at blogs.worldbank.org. The World Bank chief economist for Africa cites a study by Craig Burnside and David Dollar, which showed how recent improvements in African policies, such as the implementation of low trade barriers and fiscal stability, resulted in stronger links between foreign aid and capital growth in the region. Adverse external shocks the region has suffered in the past present another possible factor that makes aid to Africa productive. Devarajan writes that according to Hansen and Tarp, foreign aid becomes productive when the donor country or region has suffered from an external negative shock.

Devarajan's new blog is related to a previous piece, where he argues that aid to Africa must be increased. The stronger economies of African countries, the decline of poverty and AIDS cases in the region, and the progress of human development as a result of aid increases to Africa from 1998 to 2009 were the main points discussed by Devarajan in that blog.

About the author

  • Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.