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Overseas Aid: Expenditure

Volume 465: debated on Tuesday 23 October 2007

To ask the Secretary of State for International Development what the evidential basis is of the statement made on page 237 of the Comprehensive Spending Review report that his Department estimates that UK development assistance is helping to permanently reduce the number of people living in poverty by 3 million per year. (159555)

The methodology used to estimate the impact of DFID spending on poverty is based on the econometric studies of Paul Collier and David Dollar showing that the impact of aid on growth varies with countries’ per capita income and policy environment. The impact of growth on poverty reduction is estimated using an average poverty elasticity of growth. This enables us to estimate the number of people removed from poverty by our aid spending in a particular country. From this we can calculate the total numbers of people lifted from poverty by the UK’s aid expenditure as currently allocated between countries; and the implications for poverty reduction of allocating our aid differently.