Foreign aid and export performance: a panel data analysis of developing countries
AbstractThe effect of foreign aid on economic activity of a country can be dampened due to potentially adverse effects on exports through a real exchange rate appreciation. In this study we examine the long-term relationship between export performance and foreign aid in developing countries while accounting for other factors. The estimates of direct effect of foreign aid on exports are imprecise. However, the effect of the quadratic term of foreign aid on exports is negative and precise. This implies large amount of foreign aid does adversely affect export performance. The results are robust to the use of two different export performance measures and different sub-samples.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2007-023.
Date of creation: 2007
Date of revision:
Publication status: Published in Theory and Practice of Foreign Aid, Sajal Lahiri editor, Elsevier, 2007, pp. 421-33
Other versions of this item:
- Jonathan Munemo & Subhayu Bandyopadhyay & Arabinda Basistha, 2006. "Foreign Aid and Export Performance: A Panel Data Analysis of Developing Countries," Working Papers 06-10 Classification-, Department of Economics, West Virginia University.
- NEP-ALL-2007-06-23 (All new papers)
- NEP-DEV-2007-06-23 (Development)
- NEP-EFF-2007-06-23 (Efficiency & Productivity)
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- Philipp Hühne & Birgit Meyer & Peter Nunnenkamp, 2013. "Who Benefits from Aid for Trade? Comparing the Effects on Recipient versus Donor Exports," Kiel Working Papers 1852, Kiel Institute for the World Economy.
- Jonathan Munemo, 2011. "Foreign aid and export diversification in developing countries," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 20(3), pages 339-355.
- Nowak-Lehmann D., Felicitas & Martínez-Zarzoso, Inmaculada & Cardozo, Adriana & Herzer, Dierk & Klasen, Stephan, 2011. "Does Aid translate into Bilateral Trade? Findings for Recipient Countries," Proceedings of the German Development Economics Conference, Berlin 2011 61, Verein für Socialpolitik, Research Committee Development Economics.
- Badassa Tadasse & Bichaka Fayissa, 2009. "Determinants of the Allocation of US Aid forTrade," Working Papers 200901, Middle Tennessee State University, Department of Economics and Finance.
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