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Aid Unpredictability and Economic Growth

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  • Kodama, Masahiro

Abstract

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.

Suggested Citation

  • Kodama, Masahiro, 2012. "Aid Unpredictability and Economic Growth," World Development, Elsevier, vol. 40(2), pages 266-272.
    • Handle: RePEc:eee:wdevel:v:40:y:2012:i:2:p:266-272
    DOI: 10.1016/j.worlddev.2011.07.015
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