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    The impact of foreign aid on recipient countries : a case study of foreign aid flow to East Timor in reconstructing and developing the country post-independence : a thesis presented in fulfilment of the requirement for the degree of Master of Philosophy in Development Studies at Massey University
    (Massey University, 2001) Teme, Jorge da Conceição
    The impact of foreign aid on recipient countries, particularly in the context of the reconstruction East Timor is the main theme examined in this thesis. The analysis highlights that the impact on East Timor is in three areas, its economy, culture and politics. On the basis of different examined theories, various concepts on foreign aid are elaborated, and their advantages and disadvantages underlined. By its very nature, aid is perceived as indispensable to those in need and on this basis is labelled as a tool to help the poor or those who deserve it. But the imposition of conditions on aid has been attacked as intervening in the recipient state's affairs, and seen thereby as a tool to exert pressure rather than to ease the difficulties. For those reasons radical critics oppose foreign aid allocation, blaming donors for using development issues and poverty as a justification to establish their own power base and leaving the recipients scarred, notably in the key areas of their economic, political and cultural life. On the other hand, moderate critics suggest that foreign aid is needed but it should be reviewed and genuinely implemented in accord with its humanitarian vision and mission. This dissertation has pointed out three detrimental impacts of foreign aid on East Timor: economic dependency, political intervention and cultural imitation. The reconstruction of East Timor's economic devastation has entirely depended on foreign aid which has laid a solid base for future chronic and massive economic dependency. There is evidence of political distortions whereby international influences are dictating what they think are the best directions for East Timor to take. As for culture, East Timor has been strongly influenced into adopting models and styles, traditions and values imported with foreign aid. This thesis concludes that to escape from this reality is impossible, particularly when one takes into account the total destruction East Timor has suffered. Finally, this work leads to several recommendations to possible ways to improve the implementation of aid in East Timor, and offers some clues to minimise the potential negative impact on this newly independent nation.
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    A macroeconometric analysis of foreign aid in economic growth and development in least developed countries : a case study of the Lao People's Democratic Republic (1978-2001) : a dissertation presented in fulfilment of the requirements for the degree of Doctor of Philosophy in Economics at Massey University, Palmerston North, New Zealand
    (Massey University. Department of Applied and International Economics, 2002) Xayavong, Vilaphonh
    Despite receiving large quantities of aid, many developing countries, especially the Least Developed Countries, have remained stagnant and became more aid-dependent. This grim reality provokes vigorous debate on the effectiveness of aid. This study re-examines the effectiveness of aid, focusing on the ongoing debate on the interactive effect of aid and policy conditionality on sustainable economic growth. A theoretical model of the aid-growth nexus was developed to explain why policy conditionality attached to aid may not always promote sustainable economic growth. Noticeable methodological weaknesses in the aid fungibility and aid-growth models have led to the construction of two macroeconometric models to tackle and reduce these weaknesses. The Lao People's Democratic Republic's economy for the 1978-2001 period has been used for a case study.It is argued that the quality of policy conditionality and the recipient country's ability to complete specified policy conditions are the main factors determining the effectiveness of aid. Completing the policy prescriptions contributes to a stable aid inflow. The aid-growth nexus model developed in this study shows that stable and moderate aid inflow boosts economic growth even when aid is fungible. However, failure to complete the policy conditionality owing to inadequate policy design and problems of policy mismanagement caused by lack of state and institutional capability in the recipient country triggers an unstable aid inflow. The model shows that unstable aid flows reduce capital accumulation and economic growth in the recipient country. These empirical findings reveal that policy conditionality propagated through the "adjustment programmes" has mitigated the side effects of aid fungibility and "Dutch disease" in the case of the Lao PDR. Preliminary success in implementing the policy conditions in the pre-1997 period led to a stable aid inflow and contributed to higher economic growth. This favourable circumstance, however, was impaired by unstable aid flow in the post-1997 period. The lack of state and institutional capacity in the Lao PDR and the inadequate policy design to deal with external shocks triggered the instability of aid inflow, which in turn exacerbated the negative effects of the Asian financial crisis on the Lao PDR's economy.