Foreign Aid and its Effectiveness in Reducing  Poverty in the Republic of Nicaragua

In Nicaragua, the field of development aid has undergone a considerable change over the last decades. The donor landscape has become more diverse, and the types and compositions of aid have changed. As a result of a radical new direction that was taken by the latest Nicaraguan government in which country ownership became a more central focus to development, many traditional aid donors have scaled down their aid to Nicaragua, while emerging donors, mainly Venezuela, have become increasingly involved as providers of largely unconditional aid. This paper researches how effective project aid, budget support and Venezuelan aid to Nicaragua have been in lowering poverty levels, by testing these on the factors of conditionality, alignment with the recipient government’s objectives, harmonisation and country ownership. On the basis of these four factors, this research finds that both project aid and budget support have generally had limited effects in Nicaragua, whereas Venezuelan aid seems...Show moreIn Nicaragua, the field of development aid has undergone a considerable change over the last decades. The donor landscape has become more diverse, and the types and compositions of aid have changed. As a result of a radical new direction that was taken by the latest Nicaraguan government in which country ownership became a more central focus to development, many traditional aid donors have scaled down their aid to Nicaragua, while emerging donors, mainly Venezuela, have become increasingly involved as providers of largely unconditional aid. This paper researches how effective project aid, budget support and Venezuelan aid to Nicaragua have been in lowering poverty levels, by testing these on the factors of conditionality, alignment with the recipient government’s objectives, harmonisation and country ownership. On the basis of these four factors, this research finds that both project aid and budget support have generally had limited effects in Nicaragua, whereas Venezuelan aid seems to have had more significant effects on reducing poverty levels.Show less

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Foreign Aid and its Effectiveness in Reducing Poverty in the Republic of Nicaragua