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Foreign Aid, Donor Fragmentation, and Economic Growth

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  • Kurt Annen

    (Department of Economics and Finance, University of Guelph)

  • Stephen Kosempel

    (Department of Economics and Finance, University of Guelph)

Abstract

This paper analyzes the impact of foreign aid on growth. It differs from the existing literature in at least two important ways. First, we differentiate between foreign aid as technical assistance and non-technical assistance, and demonstrate both theoretically and empirically that this distinction is important. Second, we test the hypothesis that the effectiveness of aid depends on its level of fragmentation. To preview our main results: non-technical assistance has no statistically significant impact on growth; but technical assistance has a positive and significant impact, except in countries where it is highly fragmented.

Suggested Citation

  • Kurt Annen & Stephen Kosempel, 2009. "Foreign Aid, Donor Fragmentation, and Economic Growth," Working Papers 0914, University of Guelph, Department of Economics and Finance.
  • Handle: RePEc:gue:guelph:2009-14
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    References listed on IDEAS

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    More about this item

    Keywords

    foreign aid; technical assistance; donor fragmentation; growth;
    All these keywords.

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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