Roads Out of Poverty? Assessing the Links between Aid, Public Investment, Growth, and Poverty Reduction

75 Pages Posted: 13 Jan 2005

See all articles by Pierre-Richard Agenor

Pierre-Richard Agenor

University of Manchester - School of Social Sciences

Nihal Bayraktar

Pennsylvania State University - School of Business Administration; World Bank

Karim El Aynaoui

World Bank

Date Written: January 2005

Abstract

Agenor, Bayraktar, and El Aynaoui develop a macroeconomic framework that captures links between aid, public investment, growth, and poverty. Public investment is disaggregated into education, infrastructure, and health, and affects both aggregate supply and demand. Dutch disease effects are captured by accounting for changes in the relative price of domestic goods. The authors assess the impact of policy shocks on poverty by linking the model to a household survey. They calibrate the model for Ethiopia and simulate the changes in the allocation of aid and public investment. The authors also calculate the amount by which foreign aid should increase to reach the poverty targets of the Millennium Development Goals.

This paper - a product of Poverty Reduction and Economic Management 2, Africa Technical Families - is part of a larger effort in the region to formulate country-specific growth strategies.

Suggested Citation

Agenor, Pierre-Richard and Bayraktar, Nihal and Aynaoui, Karim El, Roads Out of Poverty? Assessing the Links between Aid, Public Investment, Growth, and Poverty Reduction (January 2005). World Bank Policy Research Working Paper No. 3490. Available at SSRN: https://ssrn.com/abstract=648025

Pierre-Richard Agenor (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Nihal Bayraktar

Pennsylvania State University - School of Business Administration ( email )

777 West Harrisburg Pike
Middletown, PA 17057-4898
United States
+1 717 948 6142 (Phone)

HOME PAGE: http://www.personal.psu.edu/nxb23/

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

Karim El Aynaoui

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

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