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Foreign Aid, Infrastructure Development and Welfare: An Intertemporal Analysis

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  • Slobodan Djajić

Abstract

The author examines the welfare implications of foreign aid within the framework of a two‐period, two‐country model of international trade. It is up to the donor country to decide what fraction of any given aid package is to be made available for the recipient's immediate consumption in period one, and what part should be allocated for investment in infrastructure that expands the recipient's production possibilities in period two. The focus of the analysis is on the conditions under which both countries agree or disagree on the manner in which the aid funds should be divided between the two options.

Suggested Citation

  • Slobodan Djajić, 2009. "Foreign Aid, Infrastructure Development and Welfare: An Intertemporal Analysis," Review of Development Economics, Wiley Blackwell, vol. 13(3), pages 393-402, August.
    • Handle: RePEc:bla:rdevec:v:13:y:2009:i:3:p:393-402
    DOI: 10.1111/j.1467-9361.2009.00497.x
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    Cited by:

    1. Hendrik KRUSE & Thais NUNEZ-ROCHA & Camélia TURCU, 2019. "Infrastructure aid for resource trade? The crossroads of strategy and sustainable development," LEO Working Papers / DR LEO 2728, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.

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