¿La ayuda internacional reduce la pobreza? Caso Paraguay

Abstract

Poverty is an issue that affects many countries around the world, and Paraguay is not the exception. The main strategies come from the same vertex, which is that Paraguay receives foreign aid called Official Development Assistance, which consists of money flows through credits or donations from multilateral or bilateral organizations, which should be directed towards the development of basic infrastructure, health or education, in order to lift and help people out of the poverty trap with a big push (significant money flow from foreign aid). Another strategy is to stop receiving foreign aid based on the fact that corruption and an appalling government do not allow money to reach the most disadvantaged people. To detect whether Paraguay was in the poverty trap or not, the average growth rate of the per capita gross domestic product was evaluated and divided into three periods which were between 1961 to 1981 (4%), 1982 to 2002 (0%) and 2003 to 2018 (3%). The result of these values suggested the presence of the poverty trap, meaning that foreign aid was justified. To find out if this growth in GDP per capita was due to the big push, the foreign aid received by Paraguay was analyzed, comparing it with other countries, concluding that it was not large enough to generate a big push. The question also remained whether foreign aid contributed positively or negatively towards reducing poverty. The results showed that a part of the foreign aid (donations) increased poverty.