Aid and Economic Development

Alice N. Sindzingre

in African Studies

Published online October 2012 | | DOI:

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The analysis of the relationships between foreign aid—also called “official development assistance” (ODA)—and economic development is a core issue in the disciplines of development economics and development studies. These relationships are addressed in the literature mostly in line with understanding the impact of foreign aid either on economic growth or on development. An understanding of the concept of aid as well as those of development and growth, respectively, is required. The concept of development is viewed as more comprehensive than that of economic growth. A consensus exists that, beyond an increase in countries’ wealth and individual incomes, “development” encompasses human development—health and education—and it includes consideration of the quality of economic and political institutions. Foreign aid includes a great variety of heterogeneous elements, for example, not only financial flows (grants and long-term loans), but also technical cooperation or debt relief, which give rise to debates on its measurement. In addition, aid can be given by different types of donors. It can be provided by multilateral institutions, that is, allocated to a given government or any sub- or nongovernmental entity by multilateral organizations, for example, the international financial institutions (the World Bank or the International Monetary Fund [IMF]) or regional institutions (such as the European Union, the Asian Development Bank, the Inter-American Development Bank, and many others). Aid can also be bilateral, that is, allocated by bilateral sources, such as governments of donor countries or various donor national entities, such as public agencies, private firms, or nongovernmental organizations. The various short- and medium-term forms of lending made by the IMF, strictly speaking, are not considered as ODA; however, concessional lending made by the World Bank is viewed as aid. Likewise, the impacts of aid are numerous: they can be macroeconomic and microeconomic and can involve all levels of human activity—economic, political, and social. This variety of definitions and channels explains why the relationships between foreign aid and development are complex, which is reflected in the literature.

Article.  14024 words. 

Subjects: African History ; African Languages ; African Music ; African Philosophy ; African Studies

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