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Foreign Aid and Urbanization in Developing Countries

  • Kevin Sylwester

    (Department of Economics, Southern Illinois University¬°XCarbondale, U.S.A.)

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    This paper examines whether developing countries receiving more foreign aid also have higher rates of urbanization. After presenting a simple theoretical model, empirical work is conducted on a cross-section of countries during the 1990s. The paper finds that foreign aid is positively associated with subsequent urbanization even after controlling for income levels, population, and regional characteristics. If this association is given a causal interpretation, the results indicate that foreign aid enlarges urban areas.

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    Article provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

    Volume (Year): 7 (2008)
    Issue (Month): 2 (August)
    Pages: 153-166

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    Handle: RePEc:ijb:journl:v:7:y:2008:i:2:p:153-166
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    1. Blackorby, Charles & Bossert, Walter & Donaldson, David, 1999. "Foreign aid and population policy: some ethical considerations," Journal of Development Economics, Elsevier, vol. 59(2), pages 203-232, August.
    2. Mosley, Paul & Hudson, John & Horrell, Sara, 1987. "Aid, the Public Sector and the Market in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 97(387), pages 616-41, September.
    3. Nyoni, Timothy S., 1998. "Foreign Aid and Economic Performance in Tanzania," World Development, Elsevier, vol. 26(7), pages 1235-1240, July.
    4. Ravallion, Martin, 2002. "On the urbanization of poverty," Journal of Development Economics, Elsevier, vol. 68(2), pages 435-442, August.
    5. Donald W. Snyder, 1996. "Foreign aid and private investment in developing economies," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(6), pages 735-745.
    6. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    7. Shukla, Vibhooti & Stark, Oded, 1990. "Policy comparisons with an agglomeration effects-augmented dual economy model," Journal of Urban Economics, Elsevier, vol. 27(1), pages 1-15, January.
    8. Raul Livas Elizondo & Paul Krugman, 1992. "Trade Policy and the Third World Metropolis," NBER Working Papers 4238, National Bureau of Economic Research, Inc.
    9. Jie Zhang, 2002. "Urbanization, population transition, and growth," Oxford Economic Papers, Oxford University Press, vol. 54(1), pages 91-117, January.
    10. Alesina, Alberto & Dollar, David, 2000. " Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
    11. Moomaw, Ronald L. & Shatter, Ali M., 1996. "Urbanization and Economic Development: A Bias toward Large Cities?," Journal of Urban Economics, Elsevier, vol. 40(1), pages 13-37, July.
    12. Judith Giles, 1994. "Another look at the evidence on foreign aid led economic growth," Applied Economics Letters, Taylor & Francis Journals, vol. 1(11), pages 194-199.
    13. Henderson, Vernon, 2003. " The Urbanization Process and Economic Growth: The So-What Question," Journal of Economic Growth, Springer, vol. 8(1), pages 47-71, March.
    14. Mallick, Sushanta & Moore, Tomoe, 2005. "Impact of World Bank lending in an adjustment-led growth model," Economic Systems, Elsevier, vol. 29(4), pages 366-383, December.
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