External Aid and Development

  • P. K. Rao


At a general level, one of the reasons for larger collective institutions functioning as bases for resource transfers stems from Arrow’s (1983, p.188) argument: “There are significant gains to social interaction above and beyond what individuals can achieve on their own.... there is a surplus created by the existence of society which is available for redistribution.” This argument also holds good when external aid, as an important source of development finance, is properly channeled and efficiently utilized by the recipients. In an ideal situation, such inputs enable relatively poorer societies to tide over financial crises, enhance economic development, promote economic integration with the global economy, and benefit donor nations with markets for their products and services. This chapter examines some of the important constraints in this context.


Development Finance Capital Flow Recipient Country Donor Country Domestic Saving 
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Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • P. K. Rao
    • 1
  1. 1.Global Development InstituteLawrencevilleUSA

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