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The World's Poorest Countries: Debt Relief or Aid?

work, Entrepreneurship, and finance

Debt relief is unlikely to stimulate investment and growth int eh nations being considered for debt relief under the highly indebted poor countries (HIPCs) initiative. This is because the HIPCs do not suffer from debt overhang. The principal obstacle to investment and growth in the HIPCs is a lack of the basic infrastructure that forms the foundation for profitable economic activity—property rights, roads schools, hospitals, and clean water. The energy and resources currently devoted to the HIPC debt relief initiative could be more efficiently employed as direct foreign aid.

178wp.pdf (258.52 KB)
Serkan Arslanalp
Peter Blair Henry
Publication Date
August, 2003