POVERTY & PUBLIC AID & ASSISTANCE

Poverty & Public Aid & Assistance

ABSTRACT

We build and implement a process for allocating public aid & assistance based on equality of opportunity in the risk of poverty. This is an alternative to Collier and Collier proposed $ [, P., and Dollar, D. (2001). World can reduce poverty by half? How policy reform and effective aid can meet international development goals. World Development, 29 (11), 1787-1802], which highlights the impact of aid on poverty reduction worldwide. Our proposed allocations, like those of Collier and Dollar, differ from current aid allocation by giving more to the poorest countries. In addition to this agreement, which share the risks of poverty more fairly among the world's population, while reducing global poverty almost as effectively as Collier and Dollar. Although poverty rates for lack of assets or inability to do things that are considered "normal", word "normal" depends on society in which person lives. Commonly accepted indicator of poverty in Third World is number of people living on an income of less than $ 1 per day, and is called "absolute income poverty." Given that this indicator would be inappropriate for use in UK and developed world, most widely accepted threshold show poverty in these regions is 60 per cent of median income after housing costs. This is called "relative poverty" and is accepted by most researchers, EU and UK government.

Table of Contents

ABSTRACT1

INTRODUCTION AND LITERATURE REVIEW3

Overview of Poverty & Its Significance3

Literature on Poverty4

Literature on Public Aid & Assistance5

Relationship between Poverty & Public Aid & Assistance7

Theory/Theoretical Perspective8

METHODOLOGY12

Hypotheses12

RESEARCH DESIGN12

Sample12

Description of dataset14

Variables & Their Measurement15

RESULTS16

CONCLUSION21

REFERENCES22

APPENDIX26

Poverty & Public Aid & Assistance

INTRODUCTION AND LITERATURE REVIEW

Overview of Poverty & Its Significance

Allocation of public aid & assistance has been very extensively debated for several decades. However, while aid can be seen as wealth redistribution, contribution of distributive justice theories has barely been considered, except in the recent article by Llavador and Roemer (2001).

Collier and Dollar, 2001 P. Collier and D. Dollar, Can World cut poverty in half? How policy reform and effective aid can meet international development goals, World Development 29 (2001) (11), pp. 1787-1802. Collier and Dollar (2001) have made the groundbreaking suggestion that aid be allocated to maximize poverty reduction. However, their method is debatable in terms of fairness. For example, they would have Solomon Islands and Central African Republic receive same proportion of aid-to-GDP (4.8%). But with growth equation they estimate and use, per capita annual growth difference is near five points (in favor of Solomon Islands), even if policies of both countries are just as good. So the poor Centrafrican has far less chance of escaping from poverty by 2015 than the poor Solomon islander.

Apart from Llavador and Roemer's contribution (2001; see below), theories of justice are strikingly ignored in studies of public aid & assistance allocation. Of course, two kinds of work have been done by the range of authors with different goals and in the variety of contexts: the “well-ordered society” (which Rawls describes as constitutional democracy) on one hand and ...