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Does development aid help poor countries catch up?

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Author Info

  • Herbertsson, Tryggvi Thor
  • Martin Paldam

    ()
    (Department of Economics, University of Aarhus, Denmark)

Abstract

Aid flows are included into the standard cross-country catch-up relation. Robust¬ness of the result is tested by changing time periods and by adding extra variables. The main results are: Absolute conver¬gence and absolute aid effec¬ti¬ve¬ness are both rejected. While conditional convergence is accepted, conditional aid effecti¬ve¬ness is found to be weak. The two relations are largely inde¬pendent. However, aid has a clear activity effect in the short run. Finally, we try to divide the countries into an A-group where aid is effective and a B-group where it harms. Several criteria of division were explored, but none were very successful – the most satisfactory is the one that divides countries according to their level of development.

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File URL: ftp://ftp.econ.au.dk/afn/wp/05/wp05_16.pdf
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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2005-16.

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Length: 26
Date of creation: 21 Jul 2005
Date of revision:
Handle: RePEc:aah:aarhec:2005-16

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Web page: http://www.econ.au.dk/afn/

Related research

Keywords: Convergence; growth; development aid effectiveness;

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References

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  1. Hristos Doucouliagos & Martin Paldam, 2005. "The Aid Effectiveness Literature. The Sad Result of 40 Years of Research," Economics Working Papers 2005-15, School of Economics and Management, University of Aarhus.
  2. 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.
  3. Francesco Busato & Bruno Chiarini & Enrico Marchetti, 2005. "Fiscal Policy under Indeterminacy and Tax Evasion," Economics Working Papers 2005-09, School of Economics and Management, University of Aarhus.
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Cited by:
  1. 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.

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