Simon Feeny

The Impact of Foreign Aid on Economic Growth in Papua New Guinea

This article investigates the impact of foreign aid on economic growth in Papua New Guinea (PNG) using time-series data for the period 1965 to 1999. Following the most recent literature, the article examines whether aid effectiveness is conditional on levels of economic policy and governance. An empirical model is estimated using the Autoregressive Distributed Lag (ARDL) approach to cointegration proposed by Pesaran and Shin [1995]. Results provide little evidence that aid and its various components have contributed to economic growth in PNG. There is some evidence that aid is more effective during periods when the country has undertaken a World Bank Structural Adjustment Program (SAP). An alternative interpretation is that a SAP may be more effective at spurring growth when supported by foreign aid.

Benchmarking firm performance

Purpose – The aim of the paper is to provide a framework for benchmarking firm performance (profitability) using panel data. Further, to illustrate how the estimation results can be used for simulation (what if?) exercises.Design/methodology/approach – The authors apply the econometric techniques used in panel data to estimate profit functions, thereby enabling us to compute measures of firm efficiencies which can subsequently be used as benchmarking tools.Findings – The results suggest that both large firms and those highly specialised, enjoy higher profit margins, whereas the more capital intensive a firm is, the lower is its profitability. As with previous studies there is strong evidence of the U‐shaped relationship between market share and profitability. The authors present an analysis of the distribution of firm efficiencies across industries as a whole, and by a number of industry groups.Research limitations/implications – Only a limited sample (with regard to the time span) of Australian firms is ...

Scaling-Up Foreign Aid: Will the Big Push Work?

International donors are substantially scaling-up aid programmes. At the same time, there are widespread reservations over how much aid recipient countries can use effectively. Such concerns are supported by the aid effectiveness literature which finds that there are limits to the amounts of aid recipients can efficiently absorb. This article demonstrates that a ‘big push’ in foreign aid will not lead to diminishing returns as long as donors get the inter-country allocation of aid right. This is true even if donors provide aid at levels equal to the well-known target of 0.7 per cent of their gross national income.

Impacts of Foreign Aid to Melanesia

Abstract This paper investigates aid effectiveness in Melanesia, a region consisting of Fiji, Papua New Guinea, the Solomon Islands, Vanuatu and New Caledonia. These countries are of great interest since they have not performed well despite being rich in resources and receiving large amounts of foreign aid. The paper examines the impact of foreign aid on agricultural growth and overall economic growth in Melanesia. The impact on agricultural growth is important since the majority of people in Melanesia live in rural areas, reliant on agriculture for their livelihoods. Using the econometric analysis of data for the period 1980 to 2001, results provide no evidence that foreign aid has impacted on the agricultural sector. However, the paper does find evidence that foreign aid has impacted favourably on economic growth. A number of explanations and policy recommendations are provided.

Aid and growth in small island developing states

Abstract Aid flows to small island developing states (SIDS) are enormous by international standards when compared to the size of their economies. Yet these countries face many severe economic challenges and many have experienced declines in the living standards of their citizens. This paper looks at the impact of aid on what is treated as a necessary precondition for improvements in living standards, typically defined. Specifically, it examines the impact of foreign aid on real per capita income growth in SIDS by econometrically analysing cross-country data for the period 1980 to 2004. A variety of econometric techniques and measures of aid are used. Results suggest that foreign aid is effective at spurring economic growth but with diminishing returns.

What type of economic growth does foreign aid support

This article contributes to the aid effectiveness literature by investigating the type of economic growth that foreign aid spurs. The impact of foreign on agricultural growth and industrial growth is examined. Results provide strong evidence to suggest that foreign aid is effective at increasing the former in recipient countries.

What Determines Australia's Response to Emergencies and Natural Disasters?

This article examines the determinants of Australias response to emergencies and natural disasters. It examines the response from the Australian public by examining contributions made to the appeals of the countrys largest Non-Governmental Organisation: World Vision of Australia. It also examines the response of the Australian Government. The data include 43 emergencies and natural disasters since 1998. Results suggest that the responses from both the public and government are positively associated with the number of people affected, media coverage, and the level of political and civil freedom in the country where the event occurred. The type and location of the emergency or disaster are important for the publics response. Differences between public and government donations exist: support from the Australian Government is positively associated with smaller countries and there is some evidence that the public donates more to events occurring in larger and poorer countries.

Modelling inter‐temporal aid allocation: a new application with an emphasis on Papua New Guinea

This paper models the inter‐temporal allocation of foreign development aid to Papua New Guinea (PNG). A formal theoretical model of aid allocation is developed, in which aid to any one country is determined jointly with aid to all other recipient countries. This is recognized in the econometric application of this model, which involves simultaneously modelling aid to a number of countries in addition to PNG. Results based on data for the period 1969–99 indicate that both recipient need and donor interest variables determine the amount of foreign aid to PNG and most other countries under consideration.

The effects of health aid on child health promotion in developing countries: cross-country evidence

Although epidemiological knowledge in relation to child health has improved in the last few decades, around 3 million children die each year in developing countries from preventable diseases. The international development community views increased immunization coverage for children as an important step in eliminating or reducing these deaths. Many developing countries have very limited resources to tackle major health problems and have to rely on external finance. This article examines the impact of foreign aid devoted to the health sector on child health promotion in developing countries. Two proxies for child health promotion are used: (a) immunization against measles and (b) immunization against Diphtheria–Pertussis–Tetanus (DPT). A range of model specifications and panel data econometric techniques are applied to data covering the period 1990 to 2005. This article finds a positive and statistically significant link between health aid and the measures of child health promotion.

Vulnerability to Multidimensional Poverty: Findings from Households in Melanesia

Abstract This paper examines vulnerability in two Melanesian small island developing states: Solomon Islands and Vanuatu. With large proportions of the population living semi-subsistence lifestyles in rural areas, consumption poverty is notoriously difficult to measure. The paper therefore departs from the standard approach and assesses household vulnerability to multidimensional poverty. The paper employs cross-sectional data from a household survey. Results indicate that vulnerability is more widespread than poverty and that vulnerability stems more from excess volatility in expected wellbeing than a particularly low expected level of wellbeing, per se. Results point to a pressing need for formal social protection policies to be implemented.