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Development Aid to Agriculture and Economic Growth

13 Pages Posted: 19 Apr 2012  

Ozgur Kaya

UAE University

Ilker Kaya

American University of Sharjah - School of Business and Management; University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Lewell F. Gunter

University of Georgia - Department of Agricultural & Applied Economics

Date Written: May 2012

Abstract

The link between foreign aid and economic growth has been a controversial issue with no strong consensus so far. This paper argues that a possible reason why some studies may conclude that aid is ineffective in promoting economic growth might be that not all aid is given for development purposes (i.e. aid given for strategic considerations, humanitarian reasons or emergency relief). This study classifies foreign aid into four subcategories: agricultural aid, social infrastructure aid, investment aid, and nonā€investment aid. Using the generalized method of moments (GMM) estimation technique on a Barro type growth regression with panel data from the aid recipient economies, this paper finds that when aid is directed to the agricultural sector of the developing countries, it is positively and significantly related to growth and can affect economic growth in the short run.

Suggested Citation

Kaya, Ozgur and Kaya, Ilker and Gunter, Lewell F., Development Aid to Agriculture and Economic Growth (May 2012). Review of Development Economics, Vol. 16, Issue 2, pp. 230-242, 2012. Available at SSRN: https://ssrn.com/abstract=2042421 or http://dx.doi.org/10.1111/j.1467-9361.2012.00658.x

Ozgur Kaya

UAE University ( email )

College of Business and Economics
P.O.Box 17555
Al Ain, 17555
United Arab Emirates

Ilker Kaya

American University of Sharjah - School of Business and Management ( email )

P.O. Box 26666
Sharjah
United Arab Emirates

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

Lewell Gunter

University of Georgia - Department of Agricultural & Applied Economics ( email )

Athens, GA 30602-7509
United States
706-542-0765 (Phone)

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