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

Minoiu, Camelia; Reddy, Sanjay G.

Download This Paper

Open PDF in Browser

Add Paper to My Library

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

Quarterly Review of Economics and Finance, Vol. 50, No. 2, 2010

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

See all articles by Camelia Minoiu

Sanjay G. Reddy

The New School - Department of Economics

There 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: 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