Success or failure? : A study on the effects of foreign aid in the case of Bolivia

Abstract: In all types of debates - regardless of topic - research findings, investigations, evaluations and media reports regarding aid will find one prominent question, namely whether there is any clear connection between aid and economic growth in countries that have received high amounts of foreign aid. One argument has been that the connection between a high amount of foreign aid and economic growth is none existing. However, this assumption has been questioned by reports that claims the opposite: that aid, with the right conditions, could have a positive effect on a country’s economic growth. This study makes an effort to examining the effects of foreign aid in Bolivia by looking at the country’s development process in terms of economic growth. Questions like - who were the main donors that contributed with foreign aid in Bolivia? In what way were this foreign aid applied? How do development agencies asses the macro economic impact of aid? - will be discussed and answered throughout the thesis. The findings of the study demonstrate the complexity of measuring development within a certain case. It depends on what one chose to include in the term as well as which area is being investigated. Furthermore, the results seems to vary between the different programs evaluated that has been shaped and implemented by foreign donors. However, drawing from the findings presented in this study, the result indicates that foreign aid in general has had a positive effect on Bolivia’s economic growth.