To celebrate 30 years of research for development, UNU-WIDER has organized a three-day event of presentations, discussion, and debate. Titled, ‘Mapping the Future of Development Economics’, the conference has taken place in Helsinki from 17 to 19 September 2015. By bringing together key figures, including some of the world’s most eminent development leaders, and the new generation of researchers and practitioners, the Institute is both continuing a worthy history, and helping to build a stronger future for the field.
Patrick Guillaumont, President of the Ferdi, was the chairman of the parallel session 4.1 “THE ECONOMICS OF FOREIGN AID” organized on Friday, 18th September.
Five introductory remarks by Patrick Guillaumont about the topic of this session
1. The economics of aid is related to aid policy.We hope to draw lessons from the economics of aid for aid policy (allocation, effectiveness).
2. Economics of aid is not only the economics of aid effectiveness. It is also the economics of aid determination, although effectiveness is linked to determination through instrumentation, indeed endogeneity of aid is a major issue.
3. Aid effectiveness is not only the effectiveness of growth. Even if growth effectiveness has been the bulk of research, aid effectiveness has also to be examined with regard to poverty reduction and progress towards all MDGs –SDGs including peace and security
4. Economics of aid effectiveness or growth not only cross-country econometric estimations, even if they are still needed at least to avoid that “bad studies drive out good” and because effectiveness may change over time and hopefully improve.
5. Heterogeneity is still a major issue, still insufficiently addressed. How country specificity influences the effectiveness of aid, what involves non linearity in estimations? My own thesis (more and more shared and now grounded on many papers) is that effectiveness is higher in vulnerable countries. And heterogeneity has strong implication on aid allocation with already a visible political impact in a UN GA resolution inviting development partners to use LDC identification criteria as aid allocation criteria and in European allocation policy where this resolution has been to some extent implemented.