1887

UN Department of Economic and Social Affairs (DESA) Working Papers

The UN Department of Economic and Social Affairs (DESA) Working Papers aim to stimulate discussion and critical comment on the broad range of economic, social and environmental issues associated with the United Nations Development Agenda.

English

Constraints to Achieving the MDGs with Scaled-Up Aid

This paper examines the macroeconomic and structural constraints to scaling up aid flows to developing countries to meet the Millennium Development Goals in 2015, including infrastructure, competitiveness and the real exchange rate, labour markets, fiscal constraints, governance, and aid volatility and fragmentation. The impact of these constraints on cost-efficient sequencing and composition of scaled-up aid flows is considered, using a dynamic computable general equilibrium model applied to Ethiopia. The main conclusions are that: (i) accelerating growth through productivity-enhancing infrastructure investment (and improved governance) is k ey to achieving the MDGs; (ii) large increases in aid risk undermining competitiveness and future growth; and (iii) skilled labour constraints require careful aid sequencing that limit the scope for frontloading.

English

Keywords: Millennium Development Goals (MDGs), aid effectiveness, absorptive capacity, scaling up aid
JEL: O11: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Macroeconomic Analyses of Economic Development; O21: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy / Planning Models; Planning Policy; O12: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Microeconomic Analyses of Economic Development
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