THE IMPACT OF FOREIGN AIDS ON POVERTY REDUCTION: AN INTERNATIONAL LITERATURE REVIEW

Year 2022, Volume: 9 Issue: 3, 130 - 144, 30.09.2022

Kassim Tafana Kassım Ertan Beceren

https://doi.org/10.17261/Pressacademia.2022.1621

Abstract

Purpose- Lately after the occurrence of the Covid-19, there has been a substantial wave of the foreign aid funds from developed to developing
economies aimed to back up the most effected countries. The concept of the foreign aids with the primary goal to eradicate poverty is not
new to economy and social development scholars since it has been researched for decades.
Methodology- The poverty eradication was adopted from what so called the Millennium Development goal (1990-2015) and Sustainable
development goal that is expected to come to an end in 2030. This study qualitatively accesses the impact and the effectiveness of the
foreign aid given to most developing countries with the aim to eradicate the poverty level.
Findings- The main objective of this paper is having an empirical conclusion on the effectiveness of the foreign aid through the critical
empirical reviews of the both quantitative and qualitative works done by different scholars in different countries.
Conclusion- The study concluded that quantitatively it is illogical to conclude weather the foreign aid really contributes to poverty reduction
in recipient’s country or not. This backed up by the presence of both empirical studies both in favour and against of foreign aids. The study
further revealed that the effectiveness of the foreign aid toward eradication of poverty depend on many factors on both recipients’ and
donor countries. Those factors include conditions attached to aids, allocation of the aids to targeted areas, authority of the states in decision
making related to foreign aid and political influence. Finally, the study suggested that for efficient use the foreign aids countries should have
a clear stipulated goals and area of prioritization. The countries also should have a clear monitoring mechanism to supervise the progress of
the funds expenditure over time

Keywords

International review, foreign aid, millennium development goals, poverty reduction, qualitative analysis.

References

• Abiola, A. G., & Olofin, O. P. (2008). Foreign Aid, Food Supply and Poverty Reduction in Nigeria - Examination of Possible Nexus. MPRA Munich Personal RePEc Archive, 2116.
• Akobeng, E. (2020). Harnessing foreign aid for the poor: role of institutional democracy. Journal of Economic Studies, 47(7), 1689–1710. https://doi.org/10.1108/JES-05-2019-0225
• Alkire, S., Oldiges, C., & Kanagaratnam, U. (2021). Examining multidimensional poverty reduction in India 2005/6–2015/16: Insights and oversights of the headcount ratio. World Development, 142, 105454. https://doi.org/10.1016/j.worlddev.2021.105454
• Alvi, E., & Senbeta, A. (2014). Foreign Aid, Growth, and Poverty Relation: A Quantile Regression Approach. The Journal of Developing Areas, 48(3), 381–403. https://doi.org/10.1353/jda.2014.0046
• Arndt, C., Jones, S., & Tarp, F. (2015). Assessing foreign aid’s long-run contribution to growth and development. World Development, 69, 6– 18. https://doi.org/10.1016/j.worlddev.2013.12.016
• Bahmani-Oskooee, M., & Oyolola, M. (2009). Poverty reduction and aid: Cross-country evidence. International Journal of Sociology and Social Policy, 29, 264–273. https://doi.org/10.1108/01443330910965796
• Boye, R. A. (2019). Impact of foreign Aid on Poverty Reduction in Ghana. 10702179, 79. http://ugspace.ug.edu.gh
• Calderón, M. C., Chong, A., & Gradstein, M. (2006). Foreign Aid , Income Inequality , and Poverty by October. http://www.iadb.org/res/publications/pubfiles/pubWP-547.pdf
• Charles, O. J., & Nicholas, A. (2009). Analysis of the Impact of Foreign Aid on Poverty Reduction in Nigeria, 1981-2017. Journal of Social Sciences, 11(1), 8923.
• Drèze, J., & Sen, A. (1989). Hunger and Public Action Oxford University Press. New Delhi, 224-7.
• Duffy, K. (1995). Social Exclusion and Human Dignity in Europe: Background Report for the Proposed Initiative by the Council of Europe. Council of Europe.
• Edgell, S. (2008). Class: Key Concept in Sociology. In Routledge.
• Edmore, M., & Odhiambo, N. M. (2018). Does Foreign Aid Reduce Poverty In Sub-Saharan Africa? A Dynamic Panel Data Analysis. In Unisa Economic Research Working paper Series.
• Farah, A. M., Önder, M., & Ayhan, E. (2018). How Foreign Aid Affect Developing Countries: The Case of Ethiopia. Avrasya Etüdleri, 1(53), 7– 39.
• Farahmand, M. (2021). The Relationship Between Economic Growth and Foreign Aid: The Case of Afghanistan. Journal of Economic Policy Researches / İktisat Politikası Araştırmaları Dergisi, 8(2), 141–154. https://doi.org/10.26650/jepr885246
• Fayissa, B., & El-Kaissy, M. I. (1999). Foreign aid and the economic growth of developing countries (LDCs): Further evidence. Studies in Comparative International Development, 34(3), 37–50. https://doi.org/10.1007/BF02687626
• Feeny, S. (2007). Impacts of foreign aid to Melanesia. Journal of the Asia Pacific Economy, 12(1), 34–60. https://doi.org/10.1080/13547860601083603
• Fried, A., & Elman, R. M. (1969). Charles Booth ’ s London. In Hutchinso and CO (Publishers).
• George, V. (1988). Wealth, Poverty and Starvation. An International Perspective. Wheatsheaf Books.
• Haughton, J., & Khandker, S. R. (2009). Handbook on Poverty and Inequality. The World Bank. Washington DC.
• Kabir, M. A. (2020). Foreign Aid Effectiveness: Evidence from Panel Data Analysis. Global Journal of Emerging Market Economies, 12(3), 283–302. https://doi.org/10.1177/0974910120961570
• Kaya, O., Kaya, I., & Gunter, L. (2013). Foreign aid and the quest for poverty reduction: Is aid to agriculture effective? Journal of Agricultural Economics, 64(3), 583–596. https://doi.org/10.1111/1477-9552.12023
• Khan, R., Zeeshan, Haque, M. I., Gupta, N., Tausif, M. R., & Kaushik, I. (2022). How foreign aid and remittances affect poverty in MENA countries? PLoS ONE, 17(1 January), 1–20. https://doi.org/10.1371/journal.pone.0261510
• Mahembe, E., & Odhiambo, N. M. (2019). Foreign aid and poverty reduction: A review of international literature. Cogent Social Sciences, 5(1). https://doi.org/10.1080/23311886.2019.1625741
• Mahembe, E., & Odhiambo, N. M. (2021). Does foreign aid reduce poverty? A dynamic panel data analysis for sub-Saharan African countries. Journal of Economic Inequality, 19(4), 875–893. https://doi.org/10.1007/s10888-021-09496-5
• MAHEMBE, E., & Odhiambo, N. M. (2017). On the Link Between Foreign Aid and Poverty Reduction in Developing Countries. Revista Galega de Economía, 26(2), 113–128. https://doi.org/10.15304/rge.26.2.4456
• Mosley, P., Hudson, J., & Verschoor, A. (2010). Aid , Poverty Reduction and the ’ New Conditionality ’ Author ( s ): Paul Mosley , John Hudson , Arjan Verschoor Published by : Blackwell Publishing for the Royal Economic Society Stable URL : http://www.jstor.org/stable/3590061 Your use of the JSTOR arch. Society, 114(496).
• Nur, A. (2015). Impact of Foreign Aid on Poverty and Economic Development In Selected Urban Areas of Mogdishu, Somalia. In (Doctoral dissertation, Kampala International University, College of Higher Degrees and Research) (Issue April). http://www.oppapers.com/essays/Impact-Of-Foreign-Aid-On-Poverty/300468
• O’Higgins, M., & Jenkins, S. (1990). Poverty in the EC: 1975, 1980, 1985. Analysing Poverty in the European Community. Eurostat News Special Edition, 1–1990.
• Okoronkwo, P. N., Victor, O. O., & Eyitayo, A. (2016). The Impact of Foreign Aid on Poverty Reduction / Alleviation Programmes in Lagos State , Nigeria. Academic Journal of Research in Economics and Management, 2(12), 40–49. https://doi.org/10.12816/0028320
• Osberg, L., & Kuan, X. (2000). International comparisons of poverty intensity: Index decomposition and bootstrap inference. Journal of Human Resources, 35(1), 51–81. https://doi.org/10.2307/146356
• Pankaj, A. K. (2005). Revisiting Foreign Aid Theories. International Studies, 42(2), 103–121. https://doi.org/10.1177/002088170404200201
• Papers, I. E. E. W., & Bender, D. (2005). Working Papers Two – Gap Models : Post-Keynesian Death and Neoclassical Rebirth (Issue 180).
• Pascall, G. (2020). Poverty and social security. In Social Policy. https://doi.org/10.4324/9780203424056-12
• Piachaud, D. (1981). Peter Townsend and the holy grail 421. New Society, 10.
• Riddell, R. C. (2014). Does foreign aid really work? Presentation at the International Development Workshop. International Development Workshop, Canberra February 2014, February, 1–18.
• Rodgers, G. (1995). The Poverty Agenda and the ILO (Geneva: International Institute for Labor Studies).
• Routley, N. (2020). Mapping the Global Flow of Foreign Aid. Visual Capitalist, January, 1. https://www.visualcapitalist.com/mapping-theglobal-flow-of-foreign-aid/
• Seedee, R. (2018). The Impact of Foreign Aid on Extreme Poverty : A Case Study of Liberia ’ s Development A thesis presented to the faculty of the School of Continuing Studies and Academic Outreach East Tennessee State University In partial fulfillment of the requirements, December issue.
• Shitile, T. S., & Sule, A. (2019). Reassessing the efficacy of foreign aid and grants in poverty reduction in Nigeria. Asian Economic and Financial Review, 9(4), 450–460. https://doi.org/10.18488/journal.aefr.2019.94.450.460
• Spicker, P. (1998). Housing and Social Exclusion. Shelter Scottish Campaign for Homeless People, 67–79. https://doi.org/10.2307/j.ctt18fs41f.10
• Statista. (2019). Largest Recipients of Humanitarian Aid Worldwide, by Country/plan (in million U.S. dollars). 1965/13, 118–39.
• Temple, J. R. (2010). Aid and conditionality. In In Handbook of Development Economics. Elsevier.
• Thapa, I. (2020). Foreign Aid : Positive and Negative Impact in Developing Countries. Public Administration Campus, Tribhuvan University, Nepal, July. https://doi.org/10.13140/RG.2.2.19155.81448
• Tiemann, S. (1993). Opinion on Social Exclusion. Official Journal of the European Communitie, 93, 268-279.
• Tsaurai, K. (2021). Impact of Foreign Aid on Poverty in the Middle East and North African ( MENA ) Region . A Panel Data Analysis Approach. Acta Universitatis Danubius. Œconomica, 17(3)., 17(3), 89–106.
• Ugwuanyi, U. B., Ezeaku, H. C., & Ibe, I. G. (2017). The Impact of Official Aid on Poverty Reduction: Empirical Evidence From Nigeria (1981- 2014) Using the Ardl and Bound Test Approach. European Journal of Sustainable Development, 6(2), 111–120. https://doi.org/10.14207/ejsd.2017.v6n2p111
• Umoru, D. (2018). National Policy and Big-Push Theory of Development In Nigeria : Moving Away from Low-Level Economic. 116(1995).
• Wrangberg, P. (2018). The Effect of Foreign Aid on Poverty Evidence from a Quasi-Experimental Setting. Erasmus University Rotterdam, 1– 36.
• Xu, K. (2020). The Sen-Shorrocks-Thon Index of Poverty Intensity. Encyclopedia of Quality of Life and Well-Being Research, 1–3. https://doi.org/10.1007/978-3-319-69909-7_2697-2
• Yontcheva, B., & Masud, N. (2005). Does Foreign Aid Reduce Poverty? Empirical Evidence From Nongovernmental and Bilateral Aid. IMF Working Papers, 05(100), 1. https://doi.org/10.5089/9781451861198.001