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Literature Review

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Effects of Foreign Aid

Part of the book series: New Frontiers in Regional Science: Asian Perspectives ((NFRSASIPER,volume 50))

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Abstract

This chapter summarizes previous studies on the effects of foreign aid based on three fields: economic growth, fiscal budget, and the relationship among aid agencies. The lessons from previous studies are summarized as follows. First, finding out the way to economic growth using foreign aid is quite important, since it is clear that economic growth leads to poverty reduction as a robust result. In addition, inviting foreign direct investment is also important because it is easier to promote economic growth, whereas foreign aid itself causes economic growth. Second, maintaining fiscal discipline is important to have an impact from foreign aid to the budget, since many studies show that government consumption increases when foreign aid is increased. Third, the cooperation among aid agencies is important because in-cooperation among aid agencies sometimes causes the concentration of aid in a certain field. Overall, the major opinion is that the governance of recipient countries decides the size of the impact of foreign aid.

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Authors and Affiliations

  1. Faculty of Business Administration, Bunkyo University, Adachi, Tokyo, Japan

    Hiroaki Sakurai

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  1. Hiroaki Sakurai
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Sakurai, H. (2021). Literature Review. In: Effects of Foreign Aid. New Frontiers in Regional Science: Asian Perspectives, vol 50. Springer, Singapore. https://doi.org/10.1007/978-981-16-2482-7_2

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