Counting Chickens When They Hatch: Timing and the Effects of Aid on Growth

28 Pages Posted: 3 Jun 2012

See all articles by Michael A. Clemens

Michael A. Clemens

Center for Global Development; IZA-Institute for the Study of Labor

Steven Radelet

Center for Global Development

Rikhil R Bhavnani

University of Wisconsin-Madison

Samuel Bazzi

University of California, San Diego (UCSD)

Multiple version iconThere are 3 versions of this paper

Date Written: June 2012

Abstract

Recent research yields widely divergent estimates of the cross‐country relationship between foreign aid receipts and economic growth. We re‐analyse data from the three most influential published aid–growth studies, strictly conserving their regression specifications, with sensible assumptions about the timing of aid effects and without questionable instruments. All three research designs show that increases in aid have been followed on average by increases in investment and growth. The most plausible explanation is that aid causes some degree of growth in recipient countries, although the magnitude of this relationship is modest, varies greatly across recipients and diminishes at high levels of aid.

Suggested Citation

Clemens, Michael Andrew and Radelet, Steven and Bhavnani, Rikhil R and Bazzi, Samuel, Counting Chickens When They Hatch: Timing and the Effects of Aid on Growth (June 2012). The Economic Journal, Vol. 122, Issue 561, pp. 590-617, 2012. Available at SSRN: https://ssrn.com/abstract=2073101 or http://dx.doi.org/10.1111/j.1468-0297.2011.02482.x

Michael Andrew Clemens

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

IZA-Institute for the Study of Labor ( email )

HOME PAGE: http://www.iza.org/profile?key=4270

Steven Radelet

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

Rikhil R Bhavnani

University of Wisconsin-Madison ( email )

110 North Hall
1050 Bascom Mall
Madison, WI 53706-1481
United States

HOME PAGE: http://www.rikhilbhavnani.com

Samuel Bazzi

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

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