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The authors examine international development aid through the lens of the [[Economics/HarrodDomarModel|Harrod-Domar model]]. They demonstrate the necessity of a rise in the savings rate in conjunction with an aid injection. Otherwise, the investment was a one-off expenditure that inflated production, and the impacts on [[Economics/BalanceOfPayments|balance of payments]] via servicing the debt negates any benefit . The authors argue for successive aid injections, rather than focusing on the efficiency of a single aid injection. |
Foreign Assistance and Economic Development
Foreign Assistance and Economic Development was written by Hollis B. Chenery and Alan M. Strout. It first emerged as a discussion paper in USAID. It was later published in the American Economic Review volume 56 (1966).
The authors examine international development aid through the lens of the Harrod-Domar model. They demonstrate the necessity of a rise in the savings rate in conjunction with an aid injection. Otherwise, the investment was a one-off expenditure that inflated production, and the impacts on balance of payments via servicing the debt negates any benefit .
The authors argue for successive aid injections, rather than focusing on the efficiency of a single aid injection.