In this paper, we examine whether aid proliferation hinders aid effectiveness in promoting economic growth. We employ a wide variety of specifications of the standard aid-growth regression using Roodman's (2007a) dataset. Specifically, we include a donor-concentration index as a proxy for donor proliferation and the interaction term between aid and a donor-concentration index as additional independent variables. Our best empirical results are in favor of a hypothesis that aid proliferation involves a negative effect on economic growth of the recipient countries with proper correction for possible biases arising from omitted variable and endogeneity problems.
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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number
07044.
Length: 40 pages Date of creation: Jul 2007 Date of revision: Handle: RePEc:eti:dpaper:07044
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Craig Burnside & David Dollar, 2000.
"Aid, Policies, and Growth,"
American Economic Review,
American Economic Association, vol. 90(4), pages 847-868, September.
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Charles C. Chang & Eduardo Fernández-Arias & Luis Serven, 1998.
"Measuring Aid Flows: A New Approach,"
RES Working Papers
4146, Inter-American Development Bank, Research Department.
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