Poverty Reduction in Developing Countries

Poverty is a serious problem of the contemporary world. According to the World Bank statistics more than 1/6 of the world's population suffers from extreme poverty (with daily income less than 1,25 dollars). The main tool of poverty alleviation is the official development aid, which is based on transfers of funds from developed to developing countries. The aim of this thesis is to assess, by how far has the development aid been succesful in reducing the poverty. The analysis of two regions -- East Asia and Sub-saharan Afrika -- will serve this purpose. In East Asia the poverty was reduced by 750 million of people within 25 years. However, the role of development aid was found to be negligible. Sub-saharan Africa, despite large volumes of aid, didn't experience any decrease in poverty incidence at all. The analysis implied that official development aid is not a way out of poverty. The solution is to integrate developing countries to international trade and to follow convenient economic policies establishing an environment favourable to business and foreign direct investments