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Aid Unpredictability and Economic Growth

  • Kodama, Masahiro
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    In this paper, we examine the influence of unpredictable aid on a recipient’s economic growth. If aid amounts vary by year and the changes are unpredictable, we expect that this “unpredictability” decreases aid’s growth-enhancing effect. This naturally raises the questions: How large is the influence of aid “unpredictability” on a recipient’s economic growth? Does “unpredictability” significantly damage aid’s growth-enhancing effect? Our research shows that the impact is significant; in a typical case, one fifth of aid is wasted due to “unpredictability.” Further, it is possible that in some cases, the aid may be wasted by as much as one third.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X11001902
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    Article provided by Elsevier in its journal World Development.

    Volume (Year): 40 (2012)
    Issue (Month): 2 ()
    Pages: 266-272

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    Handle: RePEc:eee:wdevel:v:40:y:2012:i:2:p:266-272
    Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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