Private Finance: Are Private Loans and Charitable Giving Replacing Aid?

3rd May, 2005

by Tim Harford, Bita Hadjimichael and Michael Klein

Private financial flows to developing countries, such as debt, equity, remittances, and private charitable giving, have increased dramatically over the past 20 years. One commentator has even trumpeted “the privatization of foreign aid.” Since private charitable giving remains small and developing country governments are borrowing more, not less, from official sources, this claim is misleading. But unprecedented sums are indeed flowing to the private sector in developing countries.

Part of the series on The Market for Aid:

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