TY - BOOK ID - 14277966 TI - Solow Versus Harrod-Domar : Reexamining the Aid Costs of the First Millennium Development Goal AU - Dalgaard, Carl-Johan. AU - Erickson, Lennart. PY - 2006 SN - 1451865449 1462357865 1451909977 9786613823540 1451988338 1283364107 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Economic assistance. KW - Economic aid KW - Foreign aid program KW - Foreign assistance KW - Grants-in-aid, International KW - International economic assistance KW - International grants-in-aid KW - Economic policy KW - International economic relations KW - Conditionality (International relations) KW - Exports and Imports KW - Macroeconomics KW - Production and Operations Management KW - Social Services and Welfare KW - Poverty and Homelessness KW - Welfare, Well-Being, and Poverty: General KW - Government Policy KW - Provision and Effects of Welfare Program KW - Foreign Aid KW - Aggregate Factor Income Distribution KW - Macroeconomics: Production KW - Poverty & precarity KW - Social welfare & social services KW - International economics KW - Poverty KW - Poverty reduction KW - Aid flows KW - Income KW - Productivity KW - Economic assistance KW - Industrial productivity KW - South Africa UR - https://www.unicat.be/uniCat?func=search&query=sysid:14277966 AB - The First Millennium Development Goal (MDG#1) is to cut the fraction of global population living on less than one dollar per day in half, by 2015. Foreign aid financed investments may contribute to the attainment of this goal. But how much can aid be reasonably expected to accomplish? A widespread calibration approach to answering this question is to employ the so-called development planning technique, which has the Harrod-Domar growth model at its base. Two particularly problematic assumptions in this sort of analysis are the absence of diminishing returns to capital input and an infinite speed of adjustment to steady state after a shock to the economy. We remove both of these assumptions by employing a Solow model as an organizing framework for an otherwise similar analysis. We find that in order to successfully meet the MDG#1 in the context of the currently proposed aid flows, these flows will have to be accompanied by either an acceleration in the underlying productivity growth rate or a major boost to domestic savings and investment in sub-Saharan Africa. In the absence of such changes in the economic environment, the MDG#1 is unlikely to be reached. ER -