The Value Chain of Foreign Aid

Despite an improved analytical knowledge of poverty, a complex multilateral transfer system of official development assistance (ODA), and a list of clearly defined objectives (Millennium Development Goals), poverty reduction in low-income countries remains a great challenge for researchers and practitioners alike. After an era of pessimism, recent empirical studies indicate that foreign aid leads to economic growth under certain conditions, for example a sound policy environment. However, whether or not aid also alleviates poverty is a highly debated issue.

Against this background, the book assesses the prospects of ODA for poverty reduction. The author analyzes the entire value chain of ODA, including the provision, allocation and utilization. Within each of these components, scope and limits of aid are critically examined. The horizontal interactions between donors and recipients as well as the vertical connections to local and region-specific conditions represent the heart of this book's approach.