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By James D. Wolfensohn

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While the growth rate of per-capita incomes has not been high in Bangladesh, it has increased in each decade since independence. • Market-oriented reforms in Vietnam and China have helped catalyze domestic and foreign investment there, lifting tens of millions of people out of abject poverty in the former and hundreds of millions in the latter. These are just a few examples. More systematic evidence presented below and in greater detail in the full paper supports the case that good policies and external support have been the key to progress.

Development assistance encompasses 36 The Role and Effectiveness of Development Assistance both financial and nonfinancial instruments that are aimed at supporting the recipient country’s efforts to accelerate growth and reduce poverty. Resource transfer is an important part of development assistance, and the quantitative analysis in this section will focus largely on assessing its effects. But finance is only one of the instruments used to support development and, in some situations, it is not even the most useful one.

This is largely as a result of improved policies, including a stronger market orientation, which have created better environments for private-sector growth in many countries. This progress on health, education, and income is not accidental. Governments, with the support of the development community and nongovernmental organizations (NGOs), have accelerated growth and poverty reduction by improving their policies, institutions, and governance, and through well-designed projects and programs. • Programs like Progresa in Mexico and the Bolsa Escola in Brazil have used financial incentives and parental involvement in school management to induce families to keep their children in school, substantially raising 29 A Case for Aid school enrollments among the poorest children.

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