Aspects of a new world development strategy I: Financial transfers from developed to developing nations

A global econometric model is used in this study to evaluate the effect of a grant-in-aid transfer from the developed market economies to the non-oil-exporting developing economies. Two alternative financing schemes, expenditure diversion and direct taxation, are supposed in the paying countries so that the government current amount balance is not disturbed. The results suggest that the developing countries would benefit greatly from the implementation of any transfer scheme. The developed countries, under either of the assumptions of this study, would not realize any substantial benefits from offering such a payment.