Chapter 8 The Hope for Hysteresis in Foreign Aid

Abstract

We argue that a purpose of foreign aid is to whet the appetite of the recipient to bring about a long term commitment to what the donor perceives as a need, but the recipient may rank lower down on his list of undertakings, or may be sufficiently resource constrained as to be unable to start the project. In other words, we explore the implications and conditions for success of a donor trying to affect long-term recipient policy by creating path dependence. Once the project is established, aid can be removed without reversing the process that has been set in motion.

Citation

Epstein, G.S. and Gang, I.N. (2006), "Chapter 8 The Hope for Hysteresis in Foreign Aid", Lahiri, S. (Ed.) Theory and Practice of Foreign Aid (Frontiers of Economics and Globalization, Vol. 1), Emerald Group Publishing Limited, Leeds, pp. 117-129. https://doi.org/10.1016/S1574-8715(06)01008-6