IDEAS home Printed from https://ideas.repec.org/a/ris/ecoint/0223.html
   My bibliography  Save this article

Foreign Aid, Government Policies, and Economic Growth: Further Evidence from Cross-Country Panel Data for 1970-1993

Author

Listed:
  • Lu, Shuang

    (Economics Department, Illinois State University)

  • Ram , Rati

    () (Economics Department, Illinois State University,)

Abstract

Six four-year panels for 56 aid-receiving countries, covering the period 1970-1993, are used to judge the effect of foreign aid on economic growth, with a particular focus on the role of aid-receiving countries’ government policies in the effect of aid on growth. The main point made is that the parameter indicating the role of policy in the effectiveness of aid seems highly fragile. If a reasonable augmentation of the models is done by including country-specific intercept dummy variables, policy is observed to have no significant influence on the effect of aid on growth. In some cases, the aid-policy interaction parameter does not show a positive sign even without the country-dummies. Much caution is, therefore, urged in drawing strong conclusions from such estimates about the role of aid-receiving countries’ policies in the effectiveness of aid. Three additional points are noted. First, the aid-parameter has a positive sign in every augmented model (that includes country-specific intercept dummies), but its statistical significance is somewhat mixed. Second, contrary to what one might think, the parameter estimates for several variables become more precise when country-dummies are included. Last, contrast between the estimates from models that do and do not include fixed-effects country-dummies appears methodologically instructive.

Suggested Citation

  • Lu, Shuang & Ram , Rati, 2001. "Foreign Aid, Government Policies, and Economic Growth: Further Evidence from Cross-Country Panel Data for 1970-1993," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 54(1), pages 15-29.
  • Handle: RePEc:ris:ecoint:0223
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nasser Saidi, 2003. "Promesses Chatoyantes, Pietre Performance: Aide Et Cooperation Dans Les Pays Sortant D?un Conflit," Working Papers 0331, Economic Research Forum, revised 10 2003.
    2. Dierk Herzer & Oliver Morrissey, "undated". "The Long-Run Effect of Aid on Domestic Output," Discussion Papers 09/01, University of Nottingham, CREDIT.
    3. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
    4. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages 191-216, June.
    5. León-González, Roberto & Montolio, Daniel, 2015. "Endogeneity and panel data in growth regressions: A Bayesian model averaging approach," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 23-39.
    6. Askarov, Zohid & Doucouliagos, Hristos, 2015. "Development Aid and Growth in Transition Countries," World Development, Elsevier, vol. 66(C), pages 383-399.
    7. Mehmet Eris, 2008. "Foreign aid and growth," Economics Bulletin, AccessEcon, vol. 15(14), pages 1-14.

    More about this item

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ecoint:0223. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Angela Procopio). General contact details of provider: http://edirc.repec.org/data/cacogit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.