Local Financial Development and the Aid-Growth Relationship
AbstractWith official development assistance (ODA) set to rise as countries strive to meet the Millennium Development Goals (MDGs), aid effectiveness remains an important area of development policy. An increasing number of studies support the notion that ODA can contribute to growth in a nonlinear relationship. In this paper, we investigate a new hypothesis regarding this relationship: that deeper financial markets in aid-recipient countries facilitate the management of aid flows, thereby enhancing aid effectiveness. An empirical analysis, using a panel data set, finds robust support for the hypothesis. --
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Bibliographic InfoPaper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Berlin 2006 with number 23.
Date of creation: 2006
Date of revision:
Foreign aid; economic growth; poverty; financial development;
Other versions of this item:
- Mwanza Nkusu & Selin Sayek, 2004. "Local Financial Development and the Aid-Growth Relationship," IMF Working Papers 04/238, International Monetary Fund.
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- F35 - International Economics - - International Finance - - - Foreign Aid
- O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
This paper has been announced in the following NEP Reports:
- NEP-AFR-2006-09-23 (Africa)
- NEP-ALL-2006-09-23 (All new papers)
- NEP-DEV-2006-09-23 (Development)
- NEP-FDG-2006-09-23 (Financial Development & Growth)
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