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Foreign Aid, Growth, Policy And Reform

Author

Listed:
  • Debasri Mukherjee

    (Western Michigan University)

  • Elias Shukralla

    (St. Louis Community College)

  • Eskander Alvi

    (Western Michigan University)

Abstract

Whether good macroeconomic policy facilitates aid effectiveness in generating growth is a highly debated topic. In this paper we investigate if economic reform has a favorable effect on the aid-growth relation—specifically, if reform enhances the effect of aid on growth. In doing so, we also construct a new policy index and examine the robustness of the Burnside and Dollar (2000) ‘policy view'. The results indicate that although our new policy index and reform are both growth enhancing, they do not increase aid-effectiveness and aid seem to play no positive role in the picture.

Suggested Citation

  • Debasri Mukherjee & Elias Shukralla & Eskander Alvi, 2008. "Foreign Aid, Growth, Policy And Reform," Economics Bulletin, AccessEcon, vol. 15(6), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-08o10006
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    References listed on IDEAS

    as
    1. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    2. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
    3. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
    4. C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 17-41.
    5. Collier, Paul & Dehn, Jan, 2001. "Aid, shocks, and growth," Policy Research Working Paper Series 2688, The World Bank.
    6. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    7. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    8. Eskander Alvi & Debasri Mukherjee & Elias Kedir Shukralla, 2008. "Aid, Policies, and Growth in Developing Countries: A New Look at the Empirics," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 693-706, January.
    9. Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, University Library of Munich, Germany.
    10. Eskander Alvi & Debasri Mukherjee & Elias Kedir Shukralla, 2008. "Aid, Policies, and Growth in Developing Countries: A New Look at the Empirics," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 693-706, January.
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    Cited by:

    1. Muhammad Azam & Yi Feng, 2022. "Does foreign aid stimulate economic growth in developing countries? Further evidence in both aggregate and disaggregated samples," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(2), pages 533-556, April.
    2. Afees Adebare SALISU* & Fidelis O.OGWUMIKE**, 2010. "Aid-Macroeconomic Policy Environment and Growth:Evidence From Sub-Saharan Africa," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 20, pages 1-12.
    3. Andreas Freytag & Jac C. Heckelman, 2012. "Has Assistance from USAID been Successful for Democratization? Evidence from the Transition Economies of Eastern Europe and Eurasia," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(4), pages 636-657, December.

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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