Working Paper 121 - Financing Goal 1 of the MDGs in Africa: Some Evidence from Cross-Country Data

Abstract

This study explores the role of development assistance to finance the required growth to reduce extreme poverty by half in 2015 in Africa. The study utilizes the financing gap and “optimal” aid allocation models to explore the implications of efficient aid utilization and global-aid allocation on total aid required to meet goal 1 of the MDGs. The findings suggest that efficiency in the utilization of development assistance by recipients, or optimal disbursement of aid by donors would take the Africa region a long way in reaching the target without additional assistance. This evidence provides empirical support to the recent debate on aid-effectiveness in particular and reforming aid architecture in general.