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The Impact of Foreign Aid on Aggregate Welfare Measures: A Panel Data Analysis

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  • José Alves
  • Cláudia Couto

Abstract

Does foreign aid enhance aggregate human welfare? This paper attempts to answer this question by using a panel of twenty-eight countries, covering the period from 1990 to 2014. It explores intra-country variation by splitting the sample into low-income and middle-income countries. Combined with the fixed effects estimator, these approaches sought to control for the heterogeneity of the effects of aid on welfare measures. Perhaps suprisingly, there was no evidence that foreign aid contributes to the reduction of infant mortality or increase of human development index.

Suggested Citation

  • José Alves & Cláudia Couto, 2018. "The Impact of Foreign Aid on Aggregate Welfare Measures: A Panel Data Analysis," Working Papers REM 2018/54, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp0542018
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Foreign Aid; Aggregate Human Welfare; Low-Middle Income Countries;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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