Poverty Traps, Aid, and Growth

The authors examine the empirical evidence in support of the poverty trap view of underdevelopment. They calibrate simple aggregate growth models in which poverty traps can arise due to either low saving or low technology at low levels of development. They then use these models to assess the empiric...

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Main Authors:	Kraay, Aart, Raddatz, Claudio
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ABSOLUTE TERMS ADVERSE SHOCKS AGGREGATE LEVEL AGRICULTURAL SECTOR AGRICULTURE AVAILABLE DATA AVERAGE CONSUMPTION AVERAGE GROWTH AVERAGE GROWTH RATE BENCHMARK CAPITAL ACCUMULATION CAPITAL MARKETS CAPITAL STOCK CONSTANT RATE CONSTANT RETURNS CONSUMPTION CONSUMPTION GROWTH CONSUMPTION LEVELS COUNTRY SPECIFIC DATA REQUIREMENTS DEBT DEBT RELIEF DEVELOPED COUNTRIES DEVELOPMENT GOALS DEVELOPMENT PROCESS DIMINISHING RETURNS DISCOUNT RATE DOMESTIC SAVING ECONOMISTS ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXTERNALITIES FIXED COSTS FUNCTIONAL FORMS GDP GEOGRAPHIC CHARACTERISTICS GEOGRAPHIC POVERTY TRAPS GROWTH GROWTH ACCELERATIONS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES HEALTH CARE HOUSEHOLD INCOME HOUSEHOLD LEVEL HUMAN CAPITAL INCOME INCOME DISTRIBUTION INCOME LEVELS INCREASING RETURNS LABOR MARKET LEVEL OF CAPITAL LEVEL OF TECHNOLOGY LEVELS OF CAPITAL LOCAL CURRENCY LOCAL LEVEL LONG RUN LONG-RUN INCOME MACRO DATA MACROECONOMIC MODELS MARKET IMPERFECTIONS MIDDLE INCOME COUNTRIES OUTPUT PER CAPITA OUTPUT RATIO PER CAPITA INCOME PERSISTENT POVERTY POLICY INTERVENTION POLICY INTERVENTIONS POLICY RESEARCH POOR COUNTRIES POOR HOUSEHOLDS POOR PEOPLE POPULATION GROWTH POVERTY TRAP POVERTY TRAPS PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION TECHNOLOGY PRODUCTIVE SECTORS PRODUCTIVITY PUBLIC HEALTH CARE RICH COUNTRIES SAVING FUNCTION SAVING RATE SAVINGS TECHNICAL PROGRESS TECHNOLOGY ADOPTION TFP TRANSITION ECONOMIES UTILITY FUNCTION WEALTH WORLD INCOME DISTRIBUTION
Online Access:	http://documents.worldbank.org/curated/en/2005/06/5864238/poverty-traps-aid-growth http://hdl.handle.net/10986/8220

id	okr-10986-8220
recordtype	oai_dc
spelling	okr-10986-82202021-04-23T14:02:42Z Poverty Traps, Aid, and Growth Kraay, Aart Raddatz, Claudio ABSOLUTE TERMS ADVERSE SHOCKS AGGREGATE LEVEL AGRICULTURAL SECTOR AGRICULTURE AVAILABLE DATA AVERAGE CONSUMPTION AVERAGE GROWTH AVERAGE GROWTH RATE BENCHMARK CAPITAL ACCUMULATION CAPITAL MARKETS CAPITAL STOCK CONSTANT RATE CONSTANT RETURNS CONSUMPTION CONSUMPTION GROWTH CONSUMPTION LEVELS COUNTRY SPECIFIC DATA REQUIREMENTS DEBT DEBT RELIEF DEVELOPED COUNTRIES DEVELOPMENT GOALS DEVELOPMENT PROCESS DIMINISHING RETURNS DISCOUNT RATE DOMESTIC SAVING ECONOMISTS ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXTERNALITIES FIXED COSTS FUNCTIONAL FORMS GDP GEOGRAPHIC CHARACTERISTICS GEOGRAPHIC POVERTY TRAPS GROWTH GROWTH ACCELERATIONS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES HEALTH CARE HOUSEHOLD INCOME HOUSEHOLD LEVEL HUMAN CAPITAL INCOME INCOME DISTRIBUTION INCOME LEVELS INCREASING RETURNS LABOR MARKET LEVEL OF CAPITAL LEVEL OF TECHNOLOGY LEVELS OF CAPITAL LOCAL CURRENCY LOCAL LEVEL LONG RUN LONG-RUN INCOME MACRO DATA MACROECONOMIC MODELS MARKET IMPERFECTIONS MIDDLE INCOME COUNTRIES OUTPUT PER CAPITA OUTPUT RATIO PER CAPITA INCOME PERSISTENT POVERTY POLICY INTERVENTION POLICY INTERVENTIONS POLICY RESEARCH POOR COUNTRIES POOR HOUSEHOLDS POOR PEOPLE POPULATION GROWTH POVERTY TRAP POVERTY TRAPS PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION TECHNOLOGY PRODUCTIVE SECTORS PRODUCTIVITY PUBLIC HEALTH CARE RICH COUNTRIES SAVING FUNCTION SAVING RATE SAVINGS TECHNICAL PROGRESS TECHNOLOGY ADOPTION TFP TRANSITION ECONOMIES UTILITY FUNCTION WEALTH WORLD INCOME DISTRIBUTION The authors examine the empirical evidence in support of the poverty trap view of underdevelopment. They calibrate simple aggregate growth models in which poverty traps can arise due to either low saving or low technology at low levels of development. They then use these models to assess the empirical relevance of poverty traps and their consequences for policy. The authors find little evidence of the existence of poverty traps based on these two broad mechanisms. When put to the task of explaining the persistence of low income in African countries, the models require either unreasonable values for key parameters, or else generate counterfactual predictions regarding the relations between key variables. These results call into question the view that a large scaling-up of aid to the poorest countries is a necessary condition for sharp and sustained increases in growth. 2012-06-15T21:24:50Z 2012-06-15T21:24:50Z 2005-06 http://documents.worldbank.org/curated/en/2005/06/5864238/poverty-traps-aid-growth http://hdl.handle.net/10986/8220 English Policy Research Working Paper; No. 3631 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ABSOLUTE TERMS ADVERSE SHOCKS AGGREGATE LEVEL AGRICULTURAL SECTOR AGRICULTURE AVAILABLE DATA AVERAGE CONSUMPTION AVERAGE GROWTH AVERAGE GROWTH RATE BENCHMARK CAPITAL ACCUMULATION CAPITAL MARKETS CAPITAL STOCK CONSTANT RATE CONSTANT RETURNS CONSUMPTION CONSUMPTION GROWTH CONSUMPTION LEVELS COUNTRY SPECIFIC DATA REQUIREMENTS DEBT DEBT RELIEF DEVELOPED COUNTRIES DEVELOPMENT GOALS DEVELOPMENT PROCESS DIMINISHING RETURNS DISCOUNT RATE DOMESTIC SAVING ECONOMISTS ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXTERNALITIES FIXED COSTS FUNCTIONAL FORMS GDP GEOGRAPHIC CHARACTERISTICS GEOGRAPHIC POVERTY TRAPS GROWTH GROWTH ACCELERATIONS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES HEALTH CARE HOUSEHOLD INCOME HOUSEHOLD LEVEL HUMAN CAPITAL INCOME INCOME DISTRIBUTION INCOME LEVELS INCREASING RETURNS LABOR MARKET LEVEL OF CAPITAL LEVEL OF TECHNOLOGY LEVELS OF CAPITAL LOCAL CURRENCY LOCAL LEVEL LONG RUN LONG-RUN INCOME MACRO DATA MACROECONOMIC MODELS MARKET IMPERFECTIONS MIDDLE INCOME COUNTRIES OUTPUT PER CAPITA OUTPUT RATIO PER CAPITA INCOME PERSISTENT POVERTY POLICY INTERVENTION POLICY INTERVENTIONS POLICY RESEARCH POOR COUNTRIES POOR HOUSEHOLDS POOR PEOPLE POPULATION GROWTH POVERTY TRAP POVERTY TRAPS PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION TECHNOLOGY PRODUCTIVE SECTORS PRODUCTIVITY PUBLIC HEALTH CARE RICH COUNTRIES SAVING FUNCTION SAVING RATE SAVINGS TECHNICAL PROGRESS TECHNOLOGY ADOPTION TFP TRANSITION ECONOMIES UTILITY FUNCTION WEALTH WORLD INCOME DISTRIBUTION
spellingShingle	ABSOLUTE TERMS ADVERSE SHOCKS AGGREGATE LEVEL AGRICULTURAL SECTOR AGRICULTURE AVAILABLE DATA AVERAGE CONSUMPTION AVERAGE GROWTH AVERAGE GROWTH RATE BENCHMARK CAPITAL ACCUMULATION CAPITAL MARKETS CAPITAL STOCK CONSTANT RATE CONSTANT RETURNS CONSUMPTION CONSUMPTION GROWTH CONSUMPTION LEVELS COUNTRY SPECIFIC DATA REQUIREMENTS DEBT DEBT RELIEF DEVELOPED COUNTRIES DEVELOPMENT GOALS DEVELOPMENT PROCESS DIMINISHING RETURNS DISCOUNT RATE DOMESTIC SAVING ECONOMISTS ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL STUDIES EQUILIBRIUM EXPENDITURES EXTERNALITIES FIXED COSTS FUNCTIONAL FORMS GDP GEOGRAPHIC CHARACTERISTICS GEOGRAPHIC POVERTY TRAPS GROWTH GROWTH ACCELERATIONS GROWTH LITERATURE GROWTH MODEL GROWTH MODELS GROWTH PERFORMANCE GROWTH RATE GROWTH RATES HEALTH CARE HOUSEHOLD INCOME HOUSEHOLD LEVEL HUMAN CAPITAL INCOME INCOME DISTRIBUTION INCOME LEVELS INCREASING RETURNS LABOR MARKET LEVEL OF CAPITAL LEVEL OF TECHNOLOGY LEVELS OF CAPITAL LOCAL CURRENCY LOCAL LEVEL LONG RUN LONG-RUN INCOME MACRO DATA MACROECONOMIC MODELS MARKET IMPERFECTIONS MIDDLE INCOME COUNTRIES OUTPUT PER CAPITA OUTPUT RATIO PER CAPITA INCOME PERSISTENT POVERTY POLICY INTERVENTION POLICY INTERVENTIONS POLICY RESEARCH POOR COUNTRIES POOR HOUSEHOLDS POOR PEOPLE POPULATION GROWTH POVERTY TRAP POVERTY TRAPS PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTION TECHNOLOGY PRODUCTIVE SECTORS PRODUCTIVITY PUBLIC HEALTH CARE RICH COUNTRIES SAVING FUNCTION SAVING RATE SAVINGS TECHNICAL PROGRESS TECHNOLOGY ADOPTION TFP TRANSITION ECONOMIES UTILITY FUNCTION WEALTH WORLD INCOME DISTRIBUTION Kraay, Aart Raddatz, Claudio Poverty Traps, Aid, and Growth
relation	Policy Research Working Paper; No. 3631
description	The authors examine the empirical evidence in support of the poverty trap view of underdevelopment. They calibrate simple aggregate growth models in which poverty traps can arise due to either low saving or low technology at low levels of development. They then use these models to assess the empirical relevance of poverty traps and their consequences for policy. The authors find little evidence of the existence of poverty traps based on these two broad mechanisms. When put to the task of explaining the persistence of low income in African countries, the models require either unreasonable values for key parameters, or else generate counterfactual predictions regarding the relations between key variables. These results call into question the view that a large scaling-up of aid to the poorest countries is a necessary condition for sharp and sustained increases in growth.
format	Publications & Research :: Policy Research Working Paper
author	Kraay, Aart Raddatz, Claudio
author_facet	Kraay, Aart Raddatz, Claudio
author_sort	Kraay, Aart
title	Poverty Traps, Aid, and Growth
title_short	Poverty Traps, Aid, and Growth
title_full	Poverty Traps, Aid, and Growth
title_fullStr	Poverty Traps, Aid, and Growth
title_full_unstemmed	Poverty Traps, Aid, and Growth
title_sort	poverty traps, aid, and growth
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/06/5864238/poverty-traps-aid-growth http://hdl.handle.net/10986/8220
_version_	1764407544807161856

Poverty Traps, Aid, and Growth

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