The Macroeconomic Effects of Foreign Aid: A Survey

University of St. Gallen Economics Discussion Paper No. 2004-11

28 Pages Posted: 13 Sep 2004

See all articles by Philipp Harms

Philipp Harms

Study Centre Gerzensee

Matthias Lutz

Swiss National Bank; University of St. Gallen

Date Written: September 2004

Abstract

Research on the macroeconomic effects of aid has expanded rapidly in recent years. In this paper, we provide a survey of this literature. We start by reviewing some theoretical models that suggest a positive impact of aid on investment and growth. We then discuss the empirical evidence, giving particular attention to the role of institutions and policies in determining aid effectiveness. As a general conclusion, we suggest adopting a more disaggregate perspective with respect both to different types of aid and to various aspects of governance.

Keywords: Foreign aid, economic growth, institutions, governance

JEL Classification: F35, F43, O16, O19

Suggested Citation

Harms, Philipp and Lutz, Matthias, The Macroeconomic Effects of Foreign Aid: A Survey (September 2004). University of St. Gallen Economics Discussion Paper No. 2004-11. Available at SSRN: https://ssrn.com/abstract=588723 or http://dx.doi.org/10.2139/ssrn.588723

Philipp Harms (Contact Author)

Study Centre Gerzensee ( email )

CH-3115 Gerzensee
Switzerland

Matthias Lutz

Swiss National Bank ( email )

Borsenstrasse 15
Zurich, 8022
Switzerland
+41 44 631 36 19 (Phone)

University of St. Gallen ( email )

Bodanstrasse 1
CH-9000 St. Gallen
Switzerland
+41/71/224 23 11 (Phone)

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