Page 280 - Volume 2_CHANGES_merged_with links

Obstacles to progress

Distortions

“ Employing data for 21 countries over the period 1970-1995, we found that aid exerts an
inequality increasing effect on income distribution--an effect that is robust to different

estimation methods, potential structural breaks, different inequality data sets, and
possible outliers. This finding adds an important dimension to the aid effectiveness
literature by complementing the long-lasting and still controversial debate on the growth

impact of aid. In particular, our results contradict the optimistic view that aid might be
effective in alleviating poverty in recipient countries even if it had no discernible average

growth effects.“
"The Effect of Foreign Aid on Income Inequality: Evidence from Panel Cointegration." 334
Herzer, Dierk, and Peter Nunnenkamp.
Structural Change and Economic Dynamics 23, no. 3 (September 2012): 245–55.

*****

“ The study finds that on average income growth has been the major driving force behind
both the declines and increases in poverty. The study, however, documents substantial
regional and country differences that are masked by this 'average' dominant-growth

story. While in the majority of countries, growth was the major factor behind falling or
increasing poverty, inequality, nevertheless, played the crucial role in poverty behavior in

a large number of countries. And, even in those countries where growth has been the
main driver of poverty-reduction, further progress could have occurred under relatively

favorable income distribution. “
“Growth, Inequality, and Poverty Reduction in Developing Countries: Recent Global Evidence .pdf” 335
Augustin Kwasi FOSU

*****

“ Although trade is not the primary contributor to changes in aggregate inequality,
adverse effects of import competition appear to be highly geographically concentrated

and long-lasting, in developing and developed countries. And they spill over to factors
such as education of the next generation, community crime, and adult health. “

"The impact of trade on developing countries"
Working Paper 23878
NATIONAL BUREAU OF ECONOMIC RESEARCH

*****
Aid & Political Stability
“ We conclude that after controlling for various economic and political variables, as well

as for possible simultaneous causality between aid received and political stability, that
aid does not seem to have any statistically meaningful effect on stability