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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Political Economy.
Volume (Year): 27 (2011)
Issue (Month): 1 (March)
Contact details of provider:
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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert J. Barro & Paul Romer, 1993.
National Bureau of Economic Research, Inc, number barr93-1, May.
- Caselli, Francesco & Feyrer, James, 2005.
"The Marginal Product of Capital,"
CEPR Discussion Papers
5203, C.E.P.R. Discussion Papers.
- Raghuram G. Rajan & Arvind Subramanian, 2005.
"Aid and Growth: What Does the Cross-Country Evidence Really Show?,"
NBER Working Papers
11513, National Bureau of Economic Research, Inc.
- 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.
- Raghuram G. Rajan, 2005. "Aid and Growth: What Does The Cross-Country Evidence Really Show?," Working Papers id:54, eSocialSciences.
- Hristos Doucouliagos & Martin Paldam, 2006.
"Aid Effectiveness on Accumulation: A Meta Study,"
Wiley Blackwell, vol. 59(2), pages 227-254, 05.
- Paul Collier & Anke Hoeffler, 2007. "Unintended Consequences: Does Aid Promote Arms Races?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(1), pages 1-27, 02.
- Silvia Marchesi & Alessandro Missale, 2007.
"How defensive were lending and aid to HIPC?,"
115, University of Milano-Bicocca, Department of Economics, revised 2007.
- Chauvet, Lisa, 2003.
"Socio-political instability and the allocation of international aid by donors,"
Economics Papers from University Paris Dauphine
123456789/5404, Paris Dauphine University.
- Chauvet, Lisa, 2003. "Socio-political instability and the allocation of international aid by donors," European Journal of Political Economy, Elsevier, vol. 19(1), pages 33-59, March.
- World Bank, 2005. "World Development Indicators 2005," World Bank Publications, The World Bank, number 12426, October.
- Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
- Patrick GUILLAUMONT & Lisa CHAUVET, 1999.
"Aid and Performance: A Reassessment,"
- Raghuram Rajan & Arvind Subramanian, 2005. "Aid and Growth," IMF Working Papers 05/127, International Monetary Fund.
- Mosley, Paul & Hudson, John & Horrell, Sara, 1987. "Aid, the Public Sector and the Market in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 97(387), pages 616-41, September.
- Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2006.
"Does US Aid Buy UN General Assembly Votes? A Disaggregated Analysis,"
Kiel Working Papers
1275, Kiel Institute for the World Economy.
- Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2008. "Does US aid buy UN general assembly votes? A disaggregated analysis," Public Choice, Springer, vol. 136(1), pages 139-164, July.
- Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2006. "Does US Aid Buy UN General Assembly Votes? A Disaggregated Analysis," KOF Working papers 06-138, KOF Swiss Economic Institute, ETH Zurich.
- Torvik, Ragnar, 2001. "Learning by doing and the Dutch disease," European Economic Review, Elsevier, vol. 45(2), pages 285-306, February.
- Berlage, Lodewijk & Terweduwe, Dirk, 1988. "The classification of countries by cluster and by factor analysis," World Development, Elsevier, vol. 16(12), pages 1527-1545, December.
- Burnside, Craig & Dollar, David, 1997.
"Aid, policies, and growth,"
Policy Research Working Paper Series
1777, The World Bank.
- William Hauk & Romain Wacziarg, 2009.
"A Monte Carlo study of growth regressions,"
Journal of Economic Growth,
Springer, vol. 14(2), pages 103-147, June.
- Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
- Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, Southern Economic Association, vol. 68(2), pages 310-329, October.
- Dollar, David & Easterly, William, 1999.
"The Search for the Key: Aid, Investment and Policies in Africa,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 8(4), pages 546-77, December.
- Dollar, David & Easterly, William, 1999. "The search for the key : aid, investment, and policies in Africa," Policy Research Working Paper Series 2070, The World Bank.
- Tomi Ovaska, 2003. "The Failure of Development Aid," Cato Journal, Cato Journal, Cato Institute, vol. 23(2), pages 175-188, Fall.
- Griffin, Keith B & Enos, J L, 1970. "Foreign Assistance: Objectives and Consequences," Economic Development and Cultural Change, University of Chicago Press, vol. 18(3), pages 313-27, April.
- Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-80, November.
- Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
- J. Svensson, 1999. "Aid, Growth and Democracy," Economics and Politics, Wiley Blackwell, vol. 11(3), pages 275-297, November.
- Hristos Doucouliagos & Martin Paldam, 2005. "Aid Effectiveness on Growth. A Meta Study," Economics Working Papers 2005-13, School of Economics and Management, University of Aarhus.
- Christopher S. Adam & David L. Bevan, 2006.
"Aid and the Supply Side: Public Investment, Export Performance, and Dutch Disease in Low-Income Countries,"
World Bank Economic Review,
World Bank Group, vol. 20(2), pages 261-290.
- Christopher Adam & David Bevan, 2004. "Aid and the Supply Side: Public Investment, Export Performance and Dutch Disease in Low Income Countries," Economics Series Working Papers 201, University of Oxford, Department of Economics.
- Feyzioglu, Tarhan & Swaroop, Vinaya & Zhu, Min, 1998. "A Panel Data Analysis of the Fungibility of Foreign Aid," World Bank Economic Review, World Bank Group, vol. 12(1), pages 29-58, January.
- Easterly, William, 2002. "How Did Heavily Indebted Poor Countries Become Heavily Indebted? Reviewing Two Decades of Debt Relief," World Development, Elsevier, vol. 30(10), pages 1677-1696, October.
- Hristos Doucouliagos & Martin Paldam, 2010.
"Conditional aid effectiveness: A meta-study,"
Journal of International Development,
John Wiley & Sons, Ltd., vol. 22(4), pages 391-410.
- Winston Moore & Chrystol Thomas, 2010.
"A meta-analysis of the relationship between debt and growth,"
International Journal of Development Issues,
Emerald Group Publishing, vol. 9(3), pages 214-225, July.
- Moore, Winston & Thomas, Chrystol, 2008. "A Meta-Analysis of the Relationship between Debt and Growth," MPRA Paper 21474, University Library of Munich, Germany.
- Bjørnskov, Christian & Schröder, Philipp J.H., 2013.
"Are debt repayment incentives undermined by foreign aid?,"
Journal of Comparative Economics,
Elsevier, vol. 41(4), pages 1073-1091.
- Bjørnskov, Christian & Schröder, Philipp J.H., 2010. "Are Debt Repayment Incentives Undermined by Foreign Aid?," Working Papers 10-20, University of Aarhus, Aarhus School of Business, Department of Economics.
- Doucouliagos, Hristos & Paldam, Martin, 2011. "The ineffectiveness of development aid on growth: An update," European Journal of Political Economy, Elsevier, vol. 27(2), pages 399-404, June.
- Raschky, Paul A. & Schwindt, Manijeh, 2012.
"On the channel and type of aid: The case of international disaster assistance,"
European Journal of Political Economy,
Elsevier, vol. 28(1), pages 119-131.
- Paul A. Raschky & Manijeh Schwindt, 2010. "On the Channel and Type of Aid: The Case of International Disaster Assistance," Monash Economics Working Papers 06-10, Monash University, Department of Economics.
- Justesen, Mogens K., 2012. "Democracy, dictatorship, and disease: Political regimes and HIV/AIDS," European Journal of Political Economy, Elsevier, vol. 28(3), pages 373-389.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.