Aid and Growth: Have We Come Full Circle?
Publikation: Working paper › Forskning
Standard
Aid and Growth : Have We Come Full Circle? / Arndt, Channing; Jones, Edward Samuel; Tarp, Finn.
Department of Economics, University of Copenhagen, 2009.Publikation: Working paper › Forskning
Harvard
APA
Vancouver
Author
Bibtex
}
RIS
TY - UNPB
T1 - Aid and Growth
T2 - Have We Come Full Circle?
AU - Arndt, Channing
AU - Jones, Edward Samuel
AU - Tarp, Finn
N1 - JEL classification: O1, O4, F35, C21
PY - 2009
Y1 - 2009
N2 - The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, recent literature has turned decidedly pessimistic with respect to the ability of foreign aid to foster economic growth. Policy implications, such as the complete cessation of aid to Africa, are being drawn on the basis of fragile evidence. This paper first assesses the aid-growth literature with a focus on recent contributions. The aid-growth literature is then framed, for the first time, in terms of the Rubin Causal Model, applied at the macroeconomic level. Our results show that aid has a positive and statistically significant causal effect on growth over the long run with point estimates at levels suggested by growth theory. We conclude that aid remains an important tool for enhancing the development prospects of poor nations.
AB - The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, recent literature has turned decidedly pessimistic with respect to the ability of foreign aid to foster economic growth. Policy implications, such as the complete cessation of aid to Africa, are being drawn on the basis of fragile evidence. This paper first assesses the aid-growth literature with a focus on recent contributions. The aid-growth literature is then framed, for the first time, in terms of the Rubin Causal Model, applied at the macroeconomic level. Our results show that aid has a positive and statistically significant causal effect on growth over the long run with point estimates at levels suggested by growth theory. We conclude that aid remains an important tool for enhancing the development prospects of poor nations.
KW - Faculty of Social Sciences
KW - foreign aid
KW - aid effectiveness
KW - causal effects
M3 - Working paper
BT - Aid and Growth
PB - Department of Economics, University of Copenhagen
ER -
ID: 15146192