Foreign Aid and Business Bottlenecks: A Study of Aid Effectiveness

34 Pages Posted: 20 Apr 2016

See all articles by Esteban Ferro

Esteban Ferro

World Bank

John S. Wilson

World Bank - Development Research Group (DECRG)

Date Written: January 1, 2011

Abstract

This paper proposes a new framework to analyze aid effectiveness. Using World Bank firm survey data and OECD aid flow data, the authors analyze whether aid targets areas that firms in developing countries have identified as obstacles for their growth and whether aid actually improves firms' perceptions of those areas. The analysis finds that aid does target the areas that firms have identified as obstacles; aid funding trade related projects is particularly effective in targeting the correct countries. For the most part, aid has a positive impact on improving firms' perceptions, particularly in the business environment. And for each target area, smaller aid disbursements tend to be more effective at improving firm perceptions than larger disbursements.

Keywords: Environmental Economics & Policies, Development Economics & Aid Effectiveness, Disability, Gender and Health, School Health

Suggested Citation

Ferro, Esteban and Wilson, John S., Foreign Aid and Business Bottlenecks: A Study of Aid Effectiveness (January 1, 2011). World Bank Policy Research Working Paper No. 5546, Available at SSRN: https://ssrn.com/abstract=1747449

Esteban Ferro (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

John S. Wilson

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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