Roads out of Poverty? Assessing the Links between Aid, Public Investment, Growth, and Poverty Reduction

The authors develop a macroeconomic framework that captures links between aid, public investment, growth, and poverty. Public investment is disaggregated into education, infrastructure, and health, and affects both aggregate supply and demand. Dutch disease effects are captured by accounting for cha...

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Bibliographic Details
Main Authors:	Agénor, Pierre-Richard, Bayraktar, Nihal El, Aynaoui, Karim
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ABSORPTIVE CAPACITY ACCELERATOR ACCELERATOR EFFECT ACCOUNTING ADVERSE EFFECTS AGGREGATE DEMAND AGGREGATE SUPPLY BALANCE OF PAYMENTS BARRIERS TO ENTRY BORROWING CAPITAL FORMATION CENTRAL BANK COMPETITIVENESS CONDITIONALITY CONSUMPTION LEVELS CURRENCY DEBT DEBT RELIEF DEFICIT FINANCING DEVELOPMENT ASSISTANCE DEVELOPMENT ECONOMICS DIMINISHING RETURNS DISPOSABLE INCOME ECONOMETRIC ESTIMATES ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICIES ECONOMISTS ELASTICITIES ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL EVIDENCE EQUILIBRIUM EXCHANGE RATE EXOGENOUS SHOCKS EXOGENOUS VARIABLES EXPENDITURE EXPORTS FINANCIAL MARKETS FORMAL ANALYSIS FUNGIBILITY GDP GDP PER CAPITA GINI COEFFICIENT GROSS DOMESTIC PRODUCT GROWTH RATE HUMAN CAPITAL HUMAN DEVELOPMENT IMPORTS INCOME INCOME DISTRIBUTION INTEREST PAYMENTS INTEREST RATE INTEREST RATES LABOR MARKET LABOR SUPPLY LINKAGES MACROECONOMIC EFFECTS MACROECONOMIC POLICIES MACROECONOMICS MARGINAL PRODUCTIVITY MARKET EQUILIBRIUM MARKET PRICES MORAL HAZARD MORAL HAZARD PROBLEMS PER CAPITA INCOME PHYSICAL CAPITAL POLICY DECISIONS POVERTY LINE POWER PLANTS PRIVATE CONSUMPTION PRIVATE INVESTMENT PRIVATE SECTOR PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION INPUTS PRODUCTION PROCESS PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC EXPENDITURE PUBLIC GOODS PUBLIC INVESTMENT PUBLIC SERVICES PUBLIC SPENDING PUBLIC TRANSPORTATION PURCHASES REAL GDP REAL INCOME REAL WAGES SAFETY SAFETY NETS SAVINGS SIDE EFFECTS STOCKS TAX REVENUE TAX REVENUES TAXATION TELECOMMUNICATIONS TERMS OF TRADE TRADE POLICIES UNEMPLOYMENT VALUE OF OUTPUT WAGE FLEXIBILITY
Online Access:	http://documents.worldbank.org/curated/en/2005/01/5601860/roads-out-poverty-assessing-links-between-aid-public-investment-growth-poverty-reduction http://hdl.handle.net/10986/8892

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Summary:	The authors develop a macroeconomic framework that captures links between aid, public investment, growth, and poverty. Public investment is disaggregated into education, infrastructure, and health, and affects both aggregate supply and demand. Dutch disease effects are captured by accounting for changes in the relative price of domestic goods. The authors assess the impact of policy shocks on poverty by linking the model to a household survey. They calibrate the model for Ethiopia and simulate the changes in the allocation of aid and public investment. The authors also calculate the amount by which foreign aid should increase to reach the poverty targets of the Millennium Development Goals.

Roads out of Poverty? Assessing the Links between Aid, Public Investment, Growth, and Poverty Reduction

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