Asmah, Emmanuel E. () (Department of Business, Economics, Statistics and Informatics) Levin, Jorgen () (Department of Business, Economics, Statistics and Informatics)
Abstract
In this paper we discuss the impact of scaling-up aid in Tanzania using an economy-wide dynamic CGE model. The major conclusions coming out from this work is that productivity effects matter. If additional aid and consequently increased public spending has a positive impact on productivity this would spur GDP growth and reduce the risk of an appreciating real exchange rate. In a way this resembles previous results in the aid-growth literature that aid has a positive impact on growth in a country with good economic policies assuming that good policies have a positive impact on productivity. Presenting various scenarios on the impact of additional aid a sustained GDP growth rate of around 7 percent would be possible to achieve in a modest scaling-up aid scenario without any significant changes in the real exchange rate.
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Publisher Info
Paper provided by Örebro University, Swedish Business School in its series Working Papers with number
2008:3.
Find related papers by JEL classification: F35 - International Economics - - International Finance - - - Foreign Aid O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
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