The Role of Foreign Aid

Abstract

Rapid agricultural growth in low- and middle-income countries is possible because of the potential for a rapid catch-up with the present high-income countries. Thus, technical assistance from those countries should be especially valuable. Poverty reduction is central as an objective of foreign aid and we have shown that that requires rapid development of agriculture. Thus, it is surprising that foreign aid has had a mixed record in increasing growth and productivity of agriculture, and hence in poverty reduction. The comparative advantage of foreign technical assistance lies with agricultural research/extension systems, including higher education, with large-scale training with the emphasis on advanced degrees, assistance to a specialized lending agency for the small commercial farmer, and policy analysis.