Position Paper
Aid, Growth and Employment

This position paper on Aid, Growth, and Employment was prepared by UNU-WIDER under the ReCom programme of Research (Re) and Communication (Com) on foreign aid. It aims to provide a coherent up-to-date overview and guide to a complex issue in the development field: the relation between aid and growth. Moreover, the position paper addresses the intricate linkages between aid and employment and tries—in a forward looking perspective—to identify existing challenges for future action in development practice and research with a view to increasing aid efficiency.The position paper relates to the first and third ReCom results meetings on ‘Aid, Growth, and Macroeconomic Management’ and ‘Jobs – Aid at Work’, held in Copenhagen on 27 January and 8 October 2012 respectively. The initial draft of the position paper was prepared before the 1st ReCom results meeting in early 2012. It was subsequently updated and revised based on critique, comments, and research inputs received from a wide range of stakeholders. The paper has benefitted substantially from this process and from the deliberations at the two results meetings. To this come a host of almost 25 other conferences and seminars, held over the past two and a half years in various locations throughout the world. Background research and material on which the UNU-WIDER team has drawn includes: (i) already existing research published in a variety of forms reviewed under the ReCom programme, (ii) background papers prepared for ReCom by members of UNU-WIDER’s global network, including a range of leading specialists in the aid area from both developing and developed countries, (iii) research by UNU-WIDER staff and others, including a DIIS ReCom study report on pro-poor growth through export sector support, and (iv) papers prepared for the UNU-WIDER-AERC conference on the Macroeconomic Management of Foreign Aid, held in Nairobi on 2-3 December 2011. Further information on background papers, research studies and other outputs from ReCom is available at http://recom.wider.unu.edu/ results; and in the attached list of references, which are referred to throughout this position paper.Theme leaders for the position paper on Aid, Growth, and Employment have been Finn Tarp and Tony Addison who were supported by Tseday Jemaneh Mekasha. Other UNU-WIDER contributors include Heidi Kaila, Saurabh Singhal, Lena Lindbjerg Sperling, Roger Williamson, and Tuuli Ylinen. They have worked alongside the UNU-WIDER communication and position paper production support team consisting of: Kennedy Ambang, Dominik Etienne, Anu Laakso, Carl-Gustav Lindén, Anne Ruohonen, Susan Servas, James Stewart, Paul Silfvenius, Minna Tokkari, Janis Vehmaan-Kreula, Annett Victorero and Lumi Young. Chapter 3 of this position paper contains material from the research for ReCom by John Page, Abebe Shimeles and Måns Söderbom. Special mention is made of Hilary Bowker, formerly of CNN, for her excellent moderation of the 2012 Copenhagen Results Meeting on Jobs. Similarly, I acknowledge the moderation by Professor Holger Bernt Hansen in the Aid and Growth results meeting in January 2012.UNU-WIDER is grateful for all of the many analytical and other efforts that have enriched the Growth and Employment theme under ReCom; and we acknowledge with appreciation significant research contributions from the following professionals: P. B. Anand, C. Arndt, F. Asem, A. Bigsten, B. Bjerge, T. Bwire, F. Bourguignon, A. Chimhowu, P. Collier, F. de Weijer, G. del Castillo, G. Domfe, D. Fielding, G. Fields, A. Fosu, F. Gibson, A. Ghosray, P. Gibbon, J. Gravier-Rymaszewska, P. Guillaumont, J. Harrigan, P. Heller, J. Hudson, S. Jones, K. Juselius, P. M. Kargbo, T. Lloyd, M. Lof, D. Mallaye, R. Manning, O. Morrissey, N. F. Møller, H. Nielsen, R. Osei, K. Otsuka, P. Nielson, J. Page, J. Pirttilä, J. P. Platteau, A. Reshid, M. Quattri, A. Roe, J. Round, S. Sandström, T. Sonobe, A. Sumner, M. Söderbom, S. Tengstam, J. Tyso, R. van der Hoeven, Y. T. Urbain, L. Wagner and others.Finally, we at UNU-WIDER would like to express our warmest appreciation to Danida and Sida for financial support and collaboration over the past little more than two and a half years. Particular thanks for their efforts go to Tove Degnbol, Henning Nøhr, Anders Granlund, Lena Johansson de Château and Pernilla Sjöquist Rafiqui. It is our hope that this innovative effort in combining research and development practice has provided material that will be of help to our three main audiences, including aid agency staff alongside researchers and national policy-makers, in their combined efforts to further the effectiveness of foreign aid in the years to come.