Social Sciences
4 years ago

Debt relief over aid: the key to effective development strategies.

World Bank policy research working paper
To Give or to Forgive? Aid versus Debt Relief
Tito Cordella, Alessandro Missal

Paper Summary

Related papers

Theme background image
Social Sciences
6 years ago

University students' quality needs drive education improvements, Kano model reveals.

Education Technology
Governance Studies
Education Trends
4 views
Economics, Econometrics and Finance
8 years ago

Monetary Policy Shake-Up: Optimal Inflation Tackles Monopolistic Profits

Macroeconomic Analysis
Monetary Models
Infrastructure Impact
3 views
Economics, Econometrics and Finance
8 years ago

Nixon's Wage and Price Controls Backfired, Worsening Inflation and Economic Conditions

Macroeconomic Analysis
Macroeconomic Trends
Infrastructure Impact
2 views

The article compares giving aid versus forgiving debt to help countries develop. The researchers made a simple model where countries show if they can pay back loans. Donors prefer offering aid or debt relief based on the cost and likelihood of a country being able to pay back. If the cost of aid is low and the chance of a country being creditworthy is high, donors prefer offering aid. If the chance is low and the cost is high, donors prefer forgiving debt. Giving very little aid is best when the cost is high and the chance of a country being creditworthy is low.