Aid Does Matter After All: Revisiting the Relationship Between Aid and Growth
Challenge: The Magazine of Economic Affairs, Vol. 50, No. 2, March/April 2007
Posted: 23 Feb 2007
Recent influential studies among development economists claim that aid to developing countries is not nearly as beneficial to recipient nations as had been expected. Are these statistical analyses right? One problem is that total aid, on which most studies are based, includes two distinct kinds of aid. The first is what we might call "developmental" aid, and the second, geopolitical aid. When the authors focus only on the first kind of aid, they find strong correlations between the level of such aid and average economic growth experienced over the long term. Moreover, they do not find that aid is only effective under specific policy conditions.
Keywords: official development assistance, developmental aid, economic growth
JEL Classification: O1, O2, O4
Suggested Citation: Suggested Citation