A Dynamic Analysis of Tied Aid
AbstractIn this paper we examine the impact of tied aid on capital accumulation and welfare in the presence of a quota on imports. Using a simulation model we establish that tied aid can lower the relative domestic price of the manufactured good and therefore reduce the stock of capital. In the presence of a strong production externality from capital accumulation and high tying ratio, tied aid may immiserize the recipient country.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00270896.
Date of creation: 2007
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Publication status: Published, Theory and Practice of Foreign Aid, Elsevier, Amsterdam (Ed.), 2007, 173-183
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Tied aid; Quotas; Capital; Welfare;
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