Economics of Development Aid and the Japanese Development Assistance: Theories, Policies and Practices

Abstract

This paper provides a critical review of the literature on economic analysis of development aid and its relevance to the development aid policies and practices. The review is organized in two stages. First, the main features of the analysis and its progress are reviewed. Issues of aid selectivity, aid effectiveness, poverty analysis, aid fungibility, governance, modality, and transaction cost analysis of aid are reviewed. Second, the theoretical progress is evaluated from the point of view of application to the policy and practice of current issues in the Japanese development assistance. It is concluded with some proposals to improve the Japanese development assistance.