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Aid and Trade - A Donor´s Perspective

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Author Info
Felicitas Nowak-Lehmann D. () (University of Goettingen / Germany)
Inmaculada Martínez-Zarzoso (University of Goettingen / Germany)
Stephan Klasen () (University of Goettingen / Germany)
Dierk Herzer () (Johann Wolfgang Goethe University, Frankfurt / Germany)

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Abstract

Foreign aid is given for a combination of economic, political, and humanitarian motives. While its impact on economic development in recipient countries has been the main focus of research recently, we concentrate on the question to what extent it also promotes donor countries’ exports. We examine this issue using Germany as a case study where the positive impact of aid on exports has been found to be extremely high. Using more advanced methods, we compute an average return (between EUR 1.49 to EUR 1.72) of one EUR of aid spent, well below previous findings, but still surprisingly large and robust.

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Publisher Info
Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 171.

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Length: 28 pages
Date of creation: 22 Apr 2008
Date of revision:
Handle: RePEc:got:iaidps:171

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Related research
Keywords: bilateral aid donors’ exports time series properties of panel data ECM and DOLS estimation in a panel context

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F35 - International Economics - - International Finance - - - Foreign Aid
C - Mathematical and Quantitative Methods

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  5. Stock, James H, 1987. "Asymptotic Properties of Least Squares Estimators of Cointegrating Vectors," Econometrica, Econometric Society, vol. 55(5), pages 1035-56, September. [Downloadable!] (restricted)
  6. Slobodan Djajić & Sajal Lahiri & Pascalis Raimondos-Møller, 2004. "Logic of Aid in an Intertemporal Setting," Review of International Economics, Blackwell Publishing, vol. 12(1), pages 151-161, 02. [Downloadable!] (restricted)
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  7. Pedroni, Peter, 1999. " Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 653-70, Special I. [Downloadable!] (restricted)
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  9. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May. [Downloadable!] (restricted)
  10. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I. [Downloadable!] (restricted)
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  13. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July. [Downloadable!] (restricted)
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  14. Joakim Westerlund, 2007. "Testing for Error Correction in Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(6), pages 709-748, December. [Downloadable!] (restricted)
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