Global Financial and Economic Crisis: Revisited Role of Development Aid

Abstract

Recent global financial and economic crisis is regarded as the “exogenous shock” to developing countries. As reflecting current globalization, the shocks' transmission mechanisms to developing economies are diversified and deepened. Responding to the shocks, macroeconomic policies by developing nations were also changed from the past with emphasis on the role of fiscal policy. As there are two aspects such as flow effect in the short-term by demand side and stock effect in the long-term by supply side derived from public investment, the short term impact of developing aid should be addressed in addition to the longer term impact on growth and poverty reduction.