This paper looks at the ?grants versus loans?? controversy. It questions the claim sometimes made that development institutions should refrain from making loans and should instead distribute ODA as outright grants only. It discusses various reasons why developing countries do not have full...

As a result of the Asian crisis, both the virtues of domestic savings and the risks of foreign savings have been emphasized in the debate on development finance. In particular, East Asia, with its enviable saving rates, it has been argued by economists such as Joe Stiglitz and Jagdish Bhagwati,...