Are There Lasting Impacts of Aid to Poor Areas? Evidence from Rural China

45 Pages Posted: 20 Apr 2016

See all articles by Shaohua Chen

Shaohua Chen

World Bank; World Bank - Development Research Group (DECRG)

Ren Mu

Texas A&M University - George Bush School of Government and Public Service

Martin Ravallion

Georgetown University

Date Written: March 1, 2008

Abstract

The paper revisits the site of a large, World Bank-financed, rural development program in China 10 years after it began and four years after disbursements ended. The program emphasized community participation in multi-sectoral interventions (including farming, animal husbandry, infrastructure and social services). Data were collected on 2,000 households in project and nonproject areas, spanning 10 years. A double-differenceestimator of the program&apos's impact (on top of pre-existing governmental programs) reveals sizeable short-term income gains that were mostly saved. Only modest gains to mean consumption emerged in the longer term-in rough accord with the gain to permanent income. Certain types of households gained more than others. The educated poor were under-covered by the community-based selection process-greatly reducing overall impact. The main results are robust to corrections for various sources of selection bias, including village targeting and interference due to spillover effects generated by the response of local governments to the external aid.

Keywords: Rural Poverty Reduction, Access to Finance, Poverty Monitoring &Analysis, Economic Theory &Research

Suggested Citation

Chen, Shaohua and Mu, Ren and Ravallion, Martin, Are There Lasting Impacts of Aid to Poor Areas? Evidence from Rural China (March 1, 2008). World Bank Policy Research Working Paper No. 4084, Available at SSRN: https://ssrn.com/abstract=950454

Shaohua Chen (Contact Author)

World Bank ( email )

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

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Ren Mu

Texas A&M University - George Bush School of Government and Public Service ( email )

TAMU 4220
1004 George Bush Dr West
College Station, TX 77843
United States
979-458-8024 (Phone)

Martin Ravallion

Georgetown University ( email )

Washington, DC 20057
United States

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