A review of foreign aid exit strategies

Abstract

Foreign aid as an economic policy was previously widely accepted as a way to assist least developed economies to achieve economic growth. Over the years, aid effectiveness has been questioned, whilst aid dependency has continued to rise. To assist in aid reduction, various economists have proposed aid exit strategies that countries could adopt to reduce aid dependency. However, the adoption of these strategies has been rather slow. The purpose of this study was to review and assess the current literature on the different proposed foreign aid exit strategies, in terms of their feasibility and ease of implementation, taking into account the current state of African economies. The analysis focused on the exit strategies recommended by Tandon (2008), Moyo (2009) and Fee (2012). The main finding of this study suggests that the aforementioned exit strategies are feasible, but not necessarily easy to implement, due to the limitations faced by many least developed countries.