Is Economic Development an Appropriate Focus for an Aid Programme

Abstract

This paper investigates whether economic development is an appropriate mandate for Official Development Assistance (ODA). The context for the paper is the change in focus of the New Zealand government aid programme which occurred in 2009. The paper starts by providing definitions of development and economic development. It then assesses international aid agency norms with respect to mandates and core focus. Subsequently it examines empirical evidence, outlining the relationship between economic development and development more generally, before assessing the evidence on whether aid is an effective tool for stimulating economic development. The paper then concludes by drawing conclusions as to whether economic development is an appropriate focus for an aid programme. Key among these is the recommendation that, rather than determining their central focus a priori, aid agencies ought to adjust their focus as dictated by the context of the countries they are working in.

Keywords: ODA, New Zealand, NZAID, foreign aid

JEL Classification: O10, F35