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Aid-growth nexus: empirical evidence from Fiji

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  • Rukmani Gounder
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    Abstract

    Foreign aid to the island economies is a major source for foreign exchange and resource needs. This paper presents an empirical analysis of the relationship between foreign aid and economic growth in the case of Fiji. A neoclassical production function is applied to estimate the aid-growth nexus. Since the data employed are time series for the period 1968 to 1996, the Autoregressive Distributed Lag approach to cointegration is utilized to estimate the models. Components of total aid, such as grant aid, loan aid, technical cooperation, bilateral and multilateral aid flows are also utilized to estimate a disaggregated short-run and long-run relationship between foreign aid and economic growth. The results show that total aid flows and its various forms, i.e. bilateral aid, grant aid and technical cooperation grant aid, has a significant impact on economic growth in Fiji. As for domestic resources, only exports and private investments in two equations show positive contribution to growth.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840122986
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 33 (2001)
    Issue (Month): 8 ()
    Pages: 1009-1019

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    Handle: RePEc:taf:applec:v:33:y:2001:i:8:p:1009-1019

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    Cited by:
    1. Bwire, Thomas & Morrissey, Oliver & Lloyd, Tim, 2013. "Foreign aid, public sector and private consumption: A cointegrated vector autoregressive approach," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    2. Rao, B. Bhaskara & Sharma, K.L. & Singh, Rup & Lata, Nalini, 2007. "A Survey of Growth and Development Issues of the Pacific Islands," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    3. Muhammad Javid & Abdul Qayyum, 2011. "Foreign Aid and Growth Nexus in Pakistan: The Role of Macroeconomic Policies," PIDE-Working Papers 2011:72, Pakistan Institute of Development Economics.
    4. Todo, Yasuyuki, 2011. "Impacts of Aid-Funded Technical Assistance Programs: Firm-Level Evidence from the Indonesian Foundry Industry," World Development, Elsevier, vol. 39(3), pages 351-362, March.
    5. Prasad, Arti & Narayan, Paresh Kumar & Narayan, Jashwini, 2007. "Exploring the oil price and real GDP nexus for a small island economy, the Fiji Islands," Energy Policy, Elsevier, vol. 35(12), pages 6506-6513, December.
    6. Cui, Xiaoyong & Gong, Liutang, 2008. "Foreign aid, domestic capital accumulation, and foreign borrowing," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1269-1284, September.
    7. Bartleet, Matthew & Gounder, Rukmani, 2010. "Energy consumption and economic growth in New Zealand: Results of trivariate and multivariate models," Energy Policy, Elsevier, vol. 38(7), pages 3508-3517, July.
    8. Balli, Faruk & Balli, Hatice O., 2011. "Income and consumption smoothing and welfare gains across Pacific Island Countries: The role of remittances and foreign aid," Economic Modelling, Elsevier, vol. 28(4), pages 1642-1649, July.
    9. Hristos Doucouliagos & Mehmet Ulubasoglu, 2006. "Democracy and Economic Growth: A Meta-Analysis," Economics Series 2006_04, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
    10. T. Bhavan & Changsheng Xu & Chunping Zhong, 2011. "Growth effect of foreign aid and volatility in South Asia," International Journal of Development Issues, Emerald Group Publishing, vol. 10(3), pages 204-213, September.
    11. Tony Addison & George Mavrotas & Mark McGillivray, 2010. "Aid, Debt Relief and New Sources of Finance for Meeting the Millennium Development Goals," Working Papers id:2592, eSocialSciences.
    12. Rajarshi Mitra & Md. Sharif Hossain, 2013. "Foreign Aid and Economic Growth in the Philippines," Economics Bulletin, AccessEcon, vol. 33(3), pages 1706-1714.

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