Food Aid: A Cause of Development Failure or an Instrument for Success?

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Abstract
The role of food aid in furthering the economic development of poor countries and in alleviating the adverse effects on the poor of structural and sectoral adjustment programs is discussed. A simple analytical framework for evaluating the incentive and welfare impact of food aid is suggested. Domestic and international markets for food historically have been subject to severe distortions, leading to ever-growing food stocks in some, mainly rich, countries while in others, largely poor, many cannot afford to consume enough food. The possible impact of distortion-free global food markets is sketched. The use of surplus food for payment of wages in rural works programs has often been proposed as a means to create productive assets while alleviating poverty. Using an applied general equililbrium model of the Indian economy, it is shown that a well-designed and efficiently implemented food-for-work program can virtually eliminate abject poverty in India at a modest cost. Experience with food aid in several other countries is also briefly discussed.

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