Aid and Sectoral Growth: Evidence from Panel Data
AbstractThis article examines empirically the proposition that aid to poor countries is detrimental for external competitiveness, giving rise to Dutch disease type effects. At the aggregate level, aid is found to have a positive effect on growth. A sectoral decomposition shows that the effect is (i) significant and positive in the tradable and the nontradable sectors, and (ii) equally strong in both sectors. The article thus provides no empirical support for the hypothesis that aid reduces external competitiveness in developing countries. A possible reason for this finding is the existence of large idle labour capacity that prevents the real exchange rate from appreciating.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Journal of Development Studies.
Volume (Year): 46 (2010)
Issue (Month): 10 ()
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- David Fielding & Fred Gibson, 2011.
"Aid and Dutch Disease in Sub-Saharan Africa,"
1108, University of Otago, Department of Economics, revised Aug 2011.
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