We first calculate the additional aid required to meet the income poverty goal by estimating the additional growth required to raise average incomes by enough to reach the goal, and then estimating the additional aid required to attain that growth. This procedure yields an estimate of an additional $54 to $62 billion in foreign aid per year to reach the income po'verty goal. Growth also has a powerful effect on progress toward the other goals, especially those associated with health (infant mortality, maternal mortality, communicable diseases) and education (primary enrollment, gender equality). The mechanism by which growth affects these other goals is twofold: income growth increases demand for health and education services; and it increases public revenues which can be spent on the supply of these services. In addition, some of the additional foreign aid will be spent directly on the social sectors, increasing access and supply of these services too. Hence, by calculating the additional aid required (via the growth channel) to achieve the income poverty goal, we are approximating the aid required to reach the social and environmental goals.

Alternatively, we can attempt to calculate the additional public resources that would be used in meeting the social and environmental goals. As noted earlier, these calculations face enormous uncertainties, not least because the link between public spending and health and education outcomes is tenuous at best. In addition, there is a difference between the average cost of providing the services to those already in the system, such as children enrolled in school, and the incremental cost of bringing those outside the system-such as the children not in school-into it. Most of our calculations are based on the a.verage cost method and may either over or underestimate the incremental costs in particular countries. With these qualifications, as a rough approximation, we can estimate the additional costs of meeting the education goals (between $10 and $15 billion); and the additional costs of meeting the health goals (between $25-30 billion). The figure for meeting the health goal is quite close to estimates reached by other studies, including recent work by the Commission on Macroeconomics and Health (albeit using different assumptions and methods). Adding these numbers together, and adjusting for the other goals (environment and water) by another $10 billion yields a total lower-bound figure of _$45_ billion, which is somewhat less than the resources required to meet the income poverty goal. Despite the huge uncertainty surrounding these estimates, the fact they seem to arrive at the same order of magnitude gives us confidence that the overall estimate of $54 to $62 billion in additional aid is not unrealistic.

# **_In_** _comne, poverty reduiction, and development assistance_

In this section we estimate the amount of official development assistance (ODA)8 needed to raise the economic growth rate of countries by enough to achieve the poverty reduction goal Implicitly we assume that the additional amount of ODA needed to achieve the poverty goal will finance, inter alia, the effort to achieve the social and environmental goals, although it is not possible to provide a complete, country-by-country reconciliation of ODA receipts and expenditures. Thus it is possible in some countries that the ODA needed to achieve the projected level of growth for poverty reduction would be insufficient to finance the needed additional expenditures in

> 8 The Development Assistance Committee of OECD recognizes two forms of aid: official development assistance (ODA) and official aid. The latter comprises flows that meet the concessionality requirements of ODA but are directed to certain transition economies or to other countries and territories in part 11 of DAC's list of aid recipients. In this analysis we include official aid as part of ODA, but exclude those countries considered by the Bank to be high income.

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