A comparative assessment of the employment consequences of UK and West German aid

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Abstract
This paper applies standard input-output methodology to estimate the employment affects of aid flows for the UK and the FRG. The conclusion is at variance with what some other economists have claimed earlier in that it shows that aid flows to developing countries do not generate a lot of jobs at home. Indeed, it is estimated that they generate fewer jobs than alternative uses of money at home, hence this paper contends that the argument of ‘self-interest’ for channelling aid to developing countries does not hold water. It is concluded that overseas development aid as a tool of alleviating domestic problems (unemployment, regional problems etc.) is pretty ineffective and aid allocation priorities should be based on grounds other than those of domestic economic considerations.

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