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On the Impact of Foreign Aid in Education on Growth: How Relevant Is the Heterogeneity of Aid Flows and the Heterogeneity of Aid Recipients?

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  • Elizabeth Asiedu
  • Boaz Nandwa

Abstract

This paper examines whether foreign aid in education has a significant effect on growth. We take into consideration the heterogeneous nature of aid as well as the heterogeneity of aid recipients—we disaggregate the aid data into primary, secondary and higher education, and run separate regressions for low income and middle income countries. We find that the effect of aid varies by income as well as by the type of aid. Thus our results underscore the importance of the heterogeneity of aid flows as well as the heterogeneity of recipient countries when analyzing the effect of aid on growth.

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Bibliographic Info

Article provided by Springer in its journal Review of World Economics.

Volume (Year): 143 (2007)
Issue (Month): 4 (December)
Pages: 631-649

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Handle: RePEc:spr:weltar:v:143:y:2007:i:4:p:631-649

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Related research

Keywords: Education; foreign aid; growth;

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References

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  1. George Mavrotas, 2005. "Aid heterogeneity: looking at aid effectiveness from a different angle," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(8), pages 1019-1036.
  2. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  3. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
  4. Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2008. "Does Aid for Education Educate Children? Evidence from Panel Data," World Bank Economic Review, World Bank Group, World Bank Group, vol. 22(2), pages 291-314, April.
  5. Matthew Odedokun, 2004. "Multilateral and Bilateral Loans versus Grants: Issues and Evidence," The World Economy, Wiley Blackwell, vol. 27(2), pages 239-263, 02.
  6. 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.
  7. Raghuram Rajan & Arvind Subramanian, 2005. "Aid and Growth," IMF Working Papers 05/127, International Monetary Fund.
  8. E. N. Appiah & W. W. McMahon, 2002. "The Social Outcomes of Education and Feedbacks on Growth in Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 38(4), pages 27-68.
  9. Alan Krueger & Mikael Lindahl, 2000. "Education for Growth: Why and For Whom?," Working Papers 808, Princeton University, Department of Economics, Industrial Relations Section..
  10. Michael Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth," Working Papers, Center for Global Development 44, Center for Global Development.
  11. McMahon, Walter W., 1998. "Education and Growth in East Asia," Economics of Education Review, Elsevier, Elsevier, vol. 17(2), pages 159-172, April.
  12. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
  13. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
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Citations

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Cited by:
  1. Pincin, Jared, 2012. "Foreign aid and political influence of the development assistance committee countries," MPRA Paper 39668, University Library of Munich, Germany.
  2. José María, Larrú, 2012. "La relación entre la ayuda al desarrollo y la desigualdad. Evidencia y justificación teórica
    [Aid and inequality relationship. Evidence and theoretical justification]
    ," MPRA Paper 38857, University Library of Munich, Germany.
  3. Subhayu Bandyopadhyay & Sajal Lahiri & Javed Younas, 2011. "Should easier access to international credit replace foreign aid?," Working Papers 2011-023, Federal Reserve Bank of St. Louis.
  4. Nicolas Van de Sijpe, 2010. "Is foreign aid fungible?� Evidence from the education and health sectors," Economics Series Working Papers CSAE WPS/2010-38, University of Oxford, Department of Economics.
  5. Christensen, Zachary & Homer, Dustin & Nielson, Daniel L., 2011. "Dodging Adverse Selection: How Donor Type and Governance Condition Aid’s Effects on School Enrollment," World Development, Elsevier, vol. 39(11), pages 2044-2053.
  6. Mina Baliamoune-Lutz & George Mavrotas, 2009. "Aid Effectiveness: Looking at the Aid-Social Capital-Growth Nexus," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 13(s1), pages 510-525, 08.
  7. Maiga, Eugenie W.H., 2014. "Does foreign aid in education foster gender equality in developing countries?," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  8. Douzounet Mallaye & Yogo Thierry Urbain, 2013. "Foreign aid and mobilization of growth factors in sub-Saharan Africa," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  9. Asiedu, Elizabeth & Jin, Yi & Nandwa, Boaz, 2009. "Does foreign aid mitigate the adverse effect of expropriation risk on foreign direct investment?," Journal of International Economics, Elsevier, vol. 78(2), pages 268-275, July.
  10. Heyneman, Stephen P. & Lee, Bommi, 2013. "International organizations and the future of education assistance," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  11. Isabel Neira Gómez & María Cadaval Sampedro & Marta Portela, 2010. "Ayuda al desarrollo, capital humano, capital social y crecimiento: una visión de la situación en Latinoamérica," Investigaciones de Economía de la Educación volume 5, Asociación de Economía de la Educación, in: María Jesús Mancebón-Torrubia & Domingo P. Ximénez-de-Embún & José María Gómez-Sancho & Greg (ed.), Investigaciones de Economía de la Educación 5, edition 1, volume 5, chapter 53, pages 1044-1060 Asociación de Economía de la Educación.
  12. George Mavrotas & Peter Nunnenkamp, 2007. "Foreign Aid Heterogeneity: Issues and Agenda," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 143(4), pages 585-595, December.

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