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Is aid the capital component making countries efficient?

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  • Veiderpass, Ann

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Andersson, Per-Åke

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

Cross country regressions on aid effectiveness have failed to provide substantial evidence on the effects of foreign aid. This study focuses on country performance in a production theory context. By means of the non-parametric DEA method, we study 60 individual low and middle income countries between 1995 and 2000. Is there a systematic correlation between resource intensity and country efficiency? We find indications of a positive relation between capital intensity and country efficiency. We then investigate whether aid is the conclusive part of capital providing this correlation, but when linking country efficiency development to aid, there is no clear pattern to be found.

Suggested Citation

  • Veiderpass, Ann & Andersson, Per-Åke, 2009. "Is aid the capital component making countries efficient?," Working Papers in Economics 333, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0333
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    File URL: http://hdl.handle.net/2077/18966
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    More about this item

    Keywords

    Aid; efficiency; country comparison; production approach;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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