Macroeconomic impact of foreign aid to developing countries

The thesis looks at the macroeconomic impact of foreign aid. It is specially concerned with aid's impact on the public sector of less developed countries < LDCs> . Since the overwhelming majority of aid is directed to the public sector of LDCs, one can only understand the broader macroeconomic impact of aid if one first understands its impact on this sector. To this end, the thesis econometrically estimates " fiscal response" models of aid. These models, in essence, attempt to shed light on public sector fiscal behaviour in the presence of aid inflows, being specially concerned with the way aid is used to finance various categories of expenditures. The underlaying concern is to extent to which aid is " fungible" -that is, whether it finances consumption expenditure and reductions in taxation revenue in LDCs. A number of alternative models are derived from a utility maximisation framework. These alternatives reflect different assumptions regarding the behaviour of LDC public sectors and relate to the endogeniety of aid, whether or not recurrent expenditure is financed from domestic borrowing and the determination of domestic borrowing. The original frameworks of earlier studies are extended in a number of ways, including the use of a public sector utility function which is fully consistent with expected maximising behaviour. Estimates of these models' parameters are obtained using both time-series and cross-section data, dating from the 1960s, for Bangladesh, India, Pakistan and the Philippines. Both structural and reduced-form equations are estimated. Results suggest that foreign aid is indeed fungible, albeit at different levels. Moreover, the overall impact of aid on public sector investment, consumption, domestic borrowing and taxation varies between countries. Generally speaking, aid leads to increases in investment and consumption expenditure, but reduces taxation and domestic borrowing. Comparative analysis does, however, show that these results are highly sensitive to alternative behavioural assumptions and, therefore, model specification.

Multilateral development assistance : good, bad or just plain ugly?€

Discusses the trends in multilateral development assistance in comparison to bilateral aid, and if multilateral development assistance can be seen as good, bad, or plain ugly. The paper additionally looks at the issues of effectiveness of multilateral aid, selectivity, poverty focus, and aid concentration.

Good practice in microfinance: the challenges of a poverty focus in an evolving industry

The awarding of the 2006 Nobel Peace prize to Grameen Bank founder Muhammad Yunus has further highlighted how microfinance has come to be regarded as a significant and effective tool in making finance available to the poor. However, much debate still centres on both how microfmance should be delivered and its effectiveness measured. Microfinance funding is not something that should be undertaken lightly, and an awareness of all the cogent issues is essential for any donor looking to undertake effective microfinance programming. This chapter will outline some of the key arguments in the contested debate on effective microfinance programming. It will focus on a discussion of poverty and impact assessments and argues that the effective funding of microfinance is dependent on the ability of an NGO to recognise the many forms which micro finance can take and direct their funding accordingly.

Efficacité de l'aide et sélectivité : vers un concept élargi

This paper surveys recent research on aid and growth. It also provides an overview of research on inter-recipient aid allocation.

What determines migration flows from low-income to high-income countries? An empirical investigation of Fiji-U.S. migration 1972-2001

This article examines the long-run and short-run determinants of migration from Fiji to the United States between 1972 and 2001 using a human capital framework, which is extended to take account of political instability in Fiji. In the long-run the authors find that differences in income levels, disparities in police strength, disparities in the number of doctors, costs of moving, and political instability in Fiji are all statistically significant with the expected sign. In the short run the cost of moving, lagged migration, political instability, and differences in both police strength and medical care are the main determinants of Fiji-United States immigration.

Entrepreneurship and economic growth : why is New Zealand an outlier? A preliminary analysis

The literature indicates that entrepreneurship and economic growth are closely and positively associated. For four years running, New Zealand has had the developed world’s highest rate of “Total Entry-Level Entrepreneurial Activity” (Acs et al. 2005; Frederick et al. 2004; Reynolds et al., 2004), yet it has slid to the lower ranks in the OECD in measures of economic development. At its level of entrepreneurial activity, New Zealand should have a higher level of economic development if it were to emulate other countries.

We make use of the Global Entrepreneurship Monitor data set, including nascent entrepreneurship rates for 45 countries over the 2000-2004 period as well as variables from standardised national statistics.

The paper uses two approaches. This research first finds evidence for “U-shaped curve” associating entrepreneurship with economic growth. It notes that New Zealand has the greatest deviation from this association compared to other developed countries with similar entrepreneurial rates (e.g. United States, Australia and Iceland). The second approach looks at nascent entrepreneurship as a function of non-economic conditions such as technology, demography, culture and institutions.

This short paper develops the hypotheses and carries out the “U-shaped curve” test. For the time being it leaves the factor analysis of non-economic conditions for another opportunity.

The outlier phenomenon in entrepreneurship and economic growth : mollycoddling policies create New Zealand’s perfect storm

Analyzing GEM 2005 data, we confirm that entrepreneurship and economic development form a U-shaped curve. We seek to understand New Zealand’s large deviation from the modeled curve by factor-analyzing all countries’ deviations from the curve. We make recommendations that would move New Zealand toward the trend line and thus aid in increasing its level of economic development. Our findings indicate that measures that overprotect workers, spoil incentives, or indulge welfare passivity can stymie economic growth even in conditions of high entrepreneurial activity.

Multi-market industrial organizational economic models for the internationalization process by small and medium enterprise construction design service firms

Small and medium enterprises (SMEs) are critical to strategic initiatives in an economy; however, their contribution to foreign trade is not as significant. SMEs are one of the principal driving forces in economic development. One of the greatest challenges is the internationalization process for longevity rather than seeing the process as initial market entry. The internationalization process research has typically involved four key constructs: market selection, decision to enter, entry modes and factors affecting entry modes. Past research has focused on large manufacturing firms. The export of architectural, engineering and construction (AEC) firms has undergone growth, yet there is still significant opportunity for further growth. The majority of AEC firms are SMEs. Notwithstanding assistance provided through international trade missions, organized export firm support networks and information packages by a burgeoning number of government agencies, there are still perceived barriers to market entry and long-term economic sustainability for SMEs. There are a number of problems faced by SMEs acting in foreign trade. This investigation explores the successful initial internationalization process constructs and identifies unique project-oriented sector characteristics. The study identified similarities and differences between two firms that have been exporting to various localities, including Eastern Europe, Africa, Middle East, UK, Asia and South America, for more than two decades. The similarities and differences were identified within eight major constructs: purpose, firm type, market image and design philosophy, entry mode strategy, institutional arrangement, factors affecting mode of entry, market selection and firm strategy in relation to project selection. The primary reasons for internationalization were associated with the firms' motivations related to growth and financial viability. This article discusses the various internationalization processes and strategies intrinsic to each case study and establishes a detailed set of empirical observations from which to develop further a grounded theoretical model of reflexive capability for the internationalization process. This study contributes to the body of knowledge around the SME AEC design service firm's internationalization process, as a dynamic, evolving and continuously adaptable construct for project-based sectors.

Biotechnology in U.S. agriculture: Trade consequences for dairy products

The emergence of synthetic bovine Somatotropin (bST) is one of the most widely discussed advances in biotechnology. Its potential impacts on milk production around the world could be significant. However, the exact economic impacts of bST in any one region depends on a number of factors, some of which are still highly controversial.

This article sets out to estimate the economic impacts of the adoption of bST in the United States, the single largest milk producer in the Western world. A quarterly econometric model of the U.S. dairy sector is used to forecast the total production, consumption, and excess supply of milk to 1995. The preliminary results indicate that under the assumption of a gradual rate of adoption and a 15 percent milk production response, the United States could be exporting as much milk as New Zealand by 1995. Should the production response rate or the adoption rate be higher, the United States could indeed become a major competitor in the world dairy market by 1995.

Although such a development could adversely impact on other dairy exporters, such as New Zealand, the precise economic impacts on world prices and trade would depend crucially on the position that other major dairy producers, especially the EC, adopt with respect to the use of bST.

Family support and ease of access link socio-economic status and sports club membership in adolescent girls : a mediation study

Background Much research has been conducted into the determinants of physical activity (PA) participation among adolescent girls. However, the more specific question of what are the determinants of particular forms of PA participation, such as the link between participation through a sports club, has not been investigated. Accordingly, the aim of this study was to investigate the relationships between participation in a sports club and socio-economic status (SES), access to facilities, and family and peer support, for female adolescents.

Methods A survey of 732 female adolescent school students (521 metropolitan, 211 non-metropolitan; 489 Year 7, 243 Year 11) was conducted. The survey included demographic information (living arrangements, ethnicity indicators, and indicators of SES such as parental education and employment status and locality); access to facilities; and family and peer support (travel, encouragement, watching, praise, joint participation). For each characteristic, sports club participants and non-participants were compared using chi-square tests. Multiple mediation analyses were used to investigate the role of access, family and peer support in the link between SES and sport participation.

Results There were significant associations (p<0.05) between sports club participation and: all demographic characteristics; all measures of family and peer support; and access to sport-related facilities. Highest levels of participation were associated with monolingual Australian-born families, with two parents, at least one of whom was well-educated, with both parents employed, and high levels of parental assistance, engagement and support. Participation in club sport among both younger and older adolescent girls was significantly positively associated with the SES of both their neighbourhoods and their households, particularly in metropolitan areas. These associations were most strongly mediated by family support and by access to facilities.

Conclusions To facilitate and promote greater participation in club sport among adolescent girls from low SES neighbourhoods and households, strategies should target modifiable determinants such as facility access and parental support. This will involve improving access to sports facilities and promoting, encouraging and assisting parents to provide support for their daughters’ participation in sport clubs.