Development Aid and Economic Growth: A Positive Long-Run Relation
59 Pages Posted: 23 May 2006 Last revised: 28 Apr 2011
Date Written: March 24, 2008
We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two kinds of aid: developmental and non-developmental. Second, our specifications allow for the effect of aid on economic growth to occur over long time-lags. Our results indicate that developmental aid promotes long-run growth. The effect is significant, large and robust to different specifications and estimation techniques.
Keywords: foreign aid, bilateral aid, aid effectiveness, aid allocation, economic growth
JEL Classification: O1, O2, O4
Suggested Citation: Suggested Citation