Growth, debt burdens and alleviating effects of foreign aid in least developed countries
AbstractWe explore the potential growth effects of foreign aid when in conjunction with severe debt problems. When used to finance debt repayments, aid may not lead to Dutch Disease while it still alleviates an economic problem. A set of empirical estimates shows that although inflows of foreign aid in general are not associated with growth in a sample of 38 Least Developed Countries, an interaction term with the level of external debt is significant. We take this as suggestive evidence of an alleviating effect of aid in these countries and offer some tentative thoughts on the implications for future aid policies.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 27 (2011)
Issue (Month): 1 (March)
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Web page: http://www.elsevier.com/locate/inca/505544
Economic growth Foreign aid External debt Cross-country analysis;
Other versions of this item:
- Bjerg, Christina & Bjørnskov, Christian & Holm, Anne, 2007. "Growth, Debt Burdens and Alleviating Effects of Foreign Aid in Least Developed Countries," Working Papers 07-1, University of Aarhus, Aarhus School of Business, Department of Economics.
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- F35 - International Economics - - International Finance - - - Foreign Aid
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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