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Evaluating Aid Effectiveness in the Aggregate: A critical assessment of the evidence

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  • Carl-Johan, Dalgaard
  • Henrik, Hansen

Abstract

The purpose of the present evaluation study is to discuss the empirical studies that attempt to estimate the impact of foreign aid on economic growth. The study draws on a previous evaluation study (Dalgaard and Hansen, 2009), which introduces the general econometric methodology involved in making assessments about the aggregate impact of aid. In order to fully benefit from the discussion below it is therefore advisable for readers without prior knowledge of econometrics to review the material discussed in Dalgaard and Hansen (2009). The present study provides insights into the following questions 1. What are the central mechanisms linking aid to growth? 2. How much should one expect from aid a priori? 3. What are the best available estimates of the impact from total aid on economic growth in income per capita? 4. Does aid modality matter?

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23026.

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Date of creation: Jan 2010
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Handle: RePEc:pra:mprapa:23026

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Keywords: Economic growth; foreign aid;

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References

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  1. Annen Kurt & Kosempel Stephen, 2009. "Foreign Aid, Donor Fragmentation, and Economic Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-32, August.
  2. Sanjay Reddy & Camelia Minoiu, 2009. "Development Aid and Economic Growth," IMF Working Papers 09/118, International Monetary Fund.
  3. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  4. Pritchett, Lant H. & DEC, 1994. "Desired fertility and the impact of population policies," Policy Research Working Paper Series 1273, The World Bank.
  5. Anke E. Hoeffler, 2000. "The Augmented Solow Model and the African Growth Debate," CID Working Papers 36, Center for International Development at Harvard University.
  6. Luis Angeles & Kyriakos C. Neanidis, 2006. "Aid Effectiveness: The Role of the Local Elite," The School of Economics Discussion Paper Series 0633, Economics, The University of Manchester.
  7. Cervellati, Matteo & Sunde, Uwe, 2009. "Life Expectancy and Economic Growth: The Role of the Demographic Transition," CEPR Discussion Papers 7361, C.E.P.R. Discussion Papers.
  8. Easterly, William, 1999. "The ghost of financing gap: testing the growth model used in the international financial institutions," Journal of Development Economics, Elsevier, vol. 60(2), pages 423-438, December.
  9. Carl-Johan Dalgaard & Lennart Erickson, 2007. "Reasonable Expectations and the First Millennium Development Goal: How Much Can Aid Achieve?," Discussion Papers 07-18, University of Copenhagen. Department of Economics.
  10. Quamrul H. Ashraf & Ashley Lester & David N. Weil, 2008. "When Does Improving Health Raise GDP?," NBER Working Papers 14449, National Bureau of Economic Research, Inc.
  11. Francesco Caselli & James Feyrer, 2005. "The Marginal Product of Capital," NBER Working Papers 11551, National Bureau of Economic Research, Inc.
  12. David E. Bloom & David Canning & Günther Fink, 2009. "Disease and Development Revisited," NBER Working Papers 15137, National Bureau of Economic Research, Inc.
  13. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2001. "On the Empirics of Foreign Aid and Growth," EPRU Working Paper Series 03-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Sep 2003.
  14. Thomas Barnebeck Andersen & Carl-Johan Dalgaard, 2006. "Cross-Border Flows of People, Technology Diffusion and Aggregate Productivity," Discussion Papers 06-04, University of Copenhagen. Department of Economics.
  15. Francesco Caselli & Gerardo Esquivel & Fernando Lefort, 1997. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Working Papers Central Bank of Chile 03, Central Bank of Chile.
  16. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  17. Bazoumana Ouattara & Eric Strobl, 2008. "Aid, Policy and Growth: Does Aid Modality Matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(2), pages 347-365, July.
  18. Areendam Chanda & Carl-Johan Dalgaard, 2003. "Dual Economies and International Total Factor Productivity Differences," EPRU Working Paper Series 03-09, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  19. Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, EconWPA.
  20. Daron Acemoglu & Simon Johnson, 2007. "Disease and Development: The Effect of Life Expectancy on Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 925-985, December.
  21. C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 17-41.
  22. Carl-Johan, Dalgaard & Henrik, Hansen, 2009. "Evaluating Aid Effectiveness in the Aggregate: Methodological Issues," MPRA Paper 23025, University Library of Munich, Germany.
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Cited by:
  1. Carl-Johan, Dalgaard & Henrik, Hansen, 2009. "Evaluating Aid Effectiveness in the Aggregate: Methodological Issues," MPRA Paper 23025, University Library of Munich, Germany.

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