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The Macroeconomic Effects of Foreign Aid: A Survey

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Author Info
Philipp Harms ()
Matthias Lutz ()

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Abstract

Research on the macroeconomic effects of aid has expanded rapidly in recent years. In this paper, we provide a survey of this literature. We start by reviewing some theoretical models that suggest a positive impact of aid on investment and growth. We then discuss the empirical evidence, giving particular attention to the role of institutions and policies in determining aid effectiveness. As a general conclusion, we suggest adopting a more disaggregate perspective with respect both to different types of aid and to various aspects of governance.

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Publisher Info
Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2004 with number 2004-11.

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Length: 26 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:usg:dp2004:2004-11

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Related research
Keywords: foreign aid; economic growth; institutions; governance;

Find related papers by JEL classification:
F35 - International Economics - - International Finance - - - Foreign Aid
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Derek Headey, 2005. "Foreign Aid and Foreign Policy: How donors undermine the effectiveness of overseas development assistance," CEPA Working Papers Series WP052005, School of Economics, University of Queensland, Australia. [Downloadable!]
  2. Asiedu, Elizabeth & Nandwa, Boaz, 2007. "The Impact of Foreign Aid in Education Growth: How Relevant is the Heterogeneity of Aid Flows and the Heterogeneity of Aid Recipients," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  3. Peter Nunnenkamp & Gustavo Canavire & Luis Triveño, 2004. "Targeting Aid to the Needy and Deserving: Nothing But Promises?," Kiel Working Papers 1229, Kiel Institute for the World Economy. [Downloadable!]
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