« For Friday's Discussion | Main | For Friday's Discussion on the SDGs »

11/10/2020

Comments

Ben Graham

In this paper, Juliana Milovich looks to analyze the relationship between foreign aid and poverty. She criticizes earlier studies regarding the impact of foreign aid in developing countries, as they inappropriately determined whether or not aid was effective by looking at overall economic growth. While growth may facilitate the overall reduction of poverty, it does not account for a number of other factors. Thus, in her study of 64 developing countries that at one point received U.S. aid between 1946 and 1999, Milovich uses the Multidimensional Poverty Index to capture the degree of poverty in these countries between 2000 and 2014. She finds a statistically significant relationship between aid received during the twentieth century and lower multidimensional poverty levels in the twenty-first century. However, she does not find a statistically significant relationship between previous aid received and contemporary poverty measured by income.

I found this article to be a great way to end the term, as it really emphasized one of the most central points of the course: poverty is complex and cannot be measured merely by income. Other factors, such as access to housing and basic services, investment in human capital, and political and social freedoms, have played a role in dictating the experience of the poor. By superficially reducing poverty to being a mere lack of income, we are not giving enough attention to a problem that is affecting millions around the globe. In order to reach the ultimate goal of eliminating poverty, we must first acknowledge that it is a more comprehensive issue that takes social, economic, and political factors into account.

Matthew Todd

This article was really interesting to me, as I think a lot about efficiency when it comes to poverty. When I see the conclusions drawn here, particularly that a “1% increase in the average amount of aid received is associated with a 0.61% reduction in the MPI.” I think of what is causing such a large gap? How could we get more bang for our buck when it comes to fighting against poverty. The paper mentions the value of using a range of indicators to measure just how effective the aid is. I'm curious whether the solution is to divert the attention to investments in the economy that could lead to the development and lower poverty in a more impactful manner. Of course, the answer would vary depending on the situation, but I'm curious about both when and how putting money in people's hands might not be the best solution to the issue. I definitely would've assumed that the aid would be more impactful, and I'm also curious how the number of aid ties in. The stats given could be used to form an argument that this is an ineffective allocation of funds for the U.S. I'm interested in how we can get this number up over time, and have a greater positive impact on struggling countries.

Katie Timmerman

This was an intriguing empirical paper and I found the elements of the research to be well-organized and clearly expressed. However, I am confused about a pretty foundational aspect of the author's study; I am unclear on the relationship between poverty as MPI and poverty as income. Shouldn't one expect these two types of poverty to be interrelated? By that I mean, if there is a decrease in MPI indicators of poverty in, say, an initial time period, shouldn't we expect to see a subsequent decrease in income poverty in a later time period? I would think that better health, more education, and better living standards would enable people to increase their incomes. Therefore, I don't quite understand how aid could cause levels of MPI to decrease without also decreasing income poverty in a later time period (i.e. in the long-run). If a relationship of this type does not exist, then economic growth necessary to sustain improved levels of MPI will not occur. Thus, a country would merely be reliant for the long-term on foreign transfers of wealth to improve their MPI levels of poverty.
It seems, intuitively, that the most efficient way of decreasing poverty is to establish sustainable means for a nation to improve its health, education, and living standards. Since it takes money to achieve these ends, income poverty and the overall economic growth of a nation are certainly of high concern for solving poverty. Theoretically, initiating aid that creates improvements in MPI indicators would lead to subsequent decreases in income poverty and to increased overall growth. If that is not the case, I'm not sure I understand how nations would be able to establish strong, independent economies that can sustain themselves and improve poverty permanently without relying on permanent foreign support.
My questions after reading this paper are then: are the improvements in MPI creating successive improvements for successive generations? Aren't MPI poverty and income poverty linked, and shouldn't they create a positive feedback loop for one another in the long-run?

Mercer Peek

This paper measures aid that comes from the U.S. and names the U.S. being the biggest source of ODA gross disbursements. While the generosity (or lack thereof) of the U.S is not the point of the paper, I think it gives a misleading idea that the U.S. is a leader in funding development aid. This could be dangerous if it leads to complacency on the part of the U.S. I recall discussions at the beginning of the term about how, in terms of percent of GNI, the U.S. is actually one of the lowest contributors of development aid. In the UNs report on progress towards the Millennium Development Goals, only 5 countries have contributed as much as their target since 2000. The U.S. is not one of them. The target is measured in terms of percent GNI. While the U.S. might provide the largest dollar amount of funding, they are still not doing as the UN asks. The figure on page 3 plots the percentage of ODA aid that comes from each country. The U.S. contributes about 25% of the budget; Japan is second at just under 20%. The U.S.’s GNI is 20.84 trillion. Japan’s GNI is 5.6 trillion. I think an uneducated reader could walk away from Milovich’s paper with a false sense of who is contributing what to global development aid. Milovich concludes that alternative measures of poverty could help us to understand the relationship between aid and poverty. I would add that examining alternative measures of aid could help us to understand the relationship between aid and poverty.

carrie morrison

I found this paper very interesting since it went on a different route to fill in gaps left by previous literature. When looking at the relationship between poverty and aid, the previous "standard relationship" to analyze was aid and growth. However, there have been no conclusive results. Milovich looked at the Multidimensional Poverty Index to analyze the effect between aid and the reduction of poverty. As mentioned by previous classmates, the typical measure of poverty seems to be income or GDP. So, its interesting to look at poverty through these measures instead of strictly through a country's GDP. This also aligns with what we have discussed in previous classes and how dimensions such as education, health, and living standards all contribute to a poverty. Moreover, Milovich's findings demonstrate that an average 1% increase in US aid does actually help lower the percentage of education, health, and standards of living by .82%, .36%, and .46%. However, there was no statistical significance found for aid and income. I thought this was interesting since the measures in the MPI were decreasing and I often thought that these were related. I think it would be interesting to see further research on how these decreases in the MPI measures can impact income, and if the measures have any influence on each other.

The comments to this entry are closed.