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Aid Effectiveness: Opening the Black Box

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  • Channing Arndt
  • Sam Jones
  • Finn Tarp

Abstract

Controversy over the aggregate impact of foreign aid has focused on reduced form estimates of the aid-growth link. The causal chain, through which aid affects developmental outcomes including growth, has received much less attention. We address this gap by: (i) specifying a structural model of the main relationships; (ii) estimating the impact of aid on a range of final and intermediate outcomes; and (iii) quantifying a simplied representation of the full structural form, where aid impacts on growth through key intermediate outcomes. A coherent picture emerges: aid stimulates growth and reduces poverty through physical capital investment and improvements in health.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/wp2011/wp2011-44.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Working Paper WP2011/44.

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Length: 30 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:unu:wpaper:wp2011-44

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Keywords: growth; foreign aid; aid effectiveness; simultaneous equations;

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References

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Citations

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Cited by:
  1. González, Mariano & Larrú, José María, 2012. "Egalitarian aid. The impact of aid on Latin American inequality," MPRA Paper 41660, University Library of Munich, Germany.
  2. Gravier-Rymaszewska, Joanna, 2012. "How Aid Supply Responds to Economic Crises: A Panel VAR Approach," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. de Janvry, Alain & Dethier, Jean-Jacques, 2012. "The World Bank and governance : the Bank's efforts to help developing countries build state capacity," Policy Research Working Paper Series 6275, The World Bank.
  4. Leiderer, Stefan, 2013. "Donor coordination for effective government policies? Implementation of the new aid effectiveness agenda in health and education in Zambia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Acharya, Arnab & Alvarez, Melisa Mart.nez, 2012. "Aid Effectiveness in the Health Sector," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Heyneman, Stephen P. & Lee, Bommi, 2013. "International organizations and the future of education assistance," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  7. Roe, Alan R., 2011. "Aid and the Fiscal and Monetary Responses to Dutch Disease," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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