Foreign Aid and Poverty in Belize: Evidence from a Caribbean Comparison

This paper investigates the role of foreign aid in poverty alleviation in Belize, set against the broader Caribbean comparative context. Belize has continued to receive large amounts of Official Development Assistance (ODA) without making significant progress in reducing poverty, which has continued to remain high. This has led to concerns about the effectiveness of foreign aid in small and vulnerable economies. Annual data from 1990 to 2022 has been used to test the role of foreign aid in economic growth and poverty alleviation using time series regression analysis. Comparative data from Jamaica and Haiti has also been used to set the context of Belize’s experience in the Caribbean. The results show that foreign aid has a positive effect on economic growth but a weak effect on poverty alleviation in the absence of domestic policies. The results also show that the effectiveness of foreign aid is constrained by structural issues in Belize. The paper concludes that foreign aid can play a role in poverty alleviation only when it is harmonized with domestic development strategies.