Development Aid and Economic Growth: A Positive Long-Run Relation

59 Pages Posted: 23 May 2006 Last revised: 28 Apr 2011

See all articles by Camelia Minoiu

Camelia Minoiu

Federal Reserve Board

Sanjay G. Reddy

The New School - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 24, 2008

Abstract

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

Minoiu, Camelia and Reddy, Sanjay G., Development Aid and Economic Growth: A Positive Long-Run Relation (March 24, 2008). Quarterly Review of Economics and Finance, Vol. 50, No. 2, 2010. Available at SSRN: https://ssrn.com/abstract=903865

Camelia Minoiu (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Sanjay G. Reddy

The New School - Department of Economics ( email )

Room 1116
6 East 16th Street
New York, NY 10003
United States

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