Foreign Aid and Microfinance: A new policy proposal for financing development
In this paper, we review and compare the potential and limitations of foreign aid and microfinance as a top-down and bottom-up approaches to financing the development process in poor countries. We not only sustain that reviewing foreign aid is a must for the future of the least-developed countries b...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Universidad de Zaragoza, Cátedra de Solidaridad y Ciudadanía Global
2015-11-01
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| Series: | Revista Iberoamericana de Estudios de Desarrollo |
| Subjects: | |
| Online Access: | http://ried.unizar.es/index.php/revista/article/viewFile/145/77 |
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| Summary: | In this paper, we review and compare the potential and limitations of foreign aid and microfinance as a top-down and bottom-up approaches to financing the development process in poor countries. We not only sustain that reviewing foreign aid is a must for the future of the least-developed countries but also posit that microfinance is a complementary and financially sustainable approach that creates better incentives for development. After calculating the potential effects of microfinance over employment and GDP through a simple empirical exercise, we propose a policy recommendation of redirecting a very small share of official development aid (ODA) resources to microfinance in order to provide options for the most underprivileged populations. |
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| ISSN: | 2254-2035 2254-2035 |