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Are There Negative Returns to Aid?

Listed author(s):
  • R. Lensink
  • H. White

The World Bank report Assessing Aid assumes that an inflow of aid, above a certain level, starts to have negative effects. In this analysis we empirically test this assumption. We find evidence for negative returns to aid at high levels of aid inflows. However, the results are sensitive to both the countries included in the sample and model specification. Moreover, the turning-point above which aid starts to have a negative effect on growth seems to be much higher than assumed in the background calculations for Assessing Aid.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/713601082
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Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 37 (2001)
Issue (Month): 6 ()
Pages: 42-65

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Handle: RePEc:taf:jdevst:v:37:y:2001:i:6:p:42-65
DOI: 10.1080/713601082
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  1. anonymous, 1995. "Does the bouncing ball lead to economic growth?," Regional Update, Federal Reserve Bank of Atlanta, issue Jul, pages 1-2,4-6.
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  5. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
  6. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
  7. Xavier Sala-i-Martin, 1995. "Transfers, social safety nets and economic growth," Economics Working Papers 139, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Morss, Elliott R., 1984. "Institutional destruction resulting from donor and project proliferation in Sub-Saharan African countries," World Development, Elsevier, vol. 12(4), pages 465-470, April.
  9. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
  10. Xavier Sala-i-Martin, 1997. "I just ran four million regressions," Economics Working Papers 201, Department of Economics and Business, Universitat Pompeu Fabra.
  11. Griffin, Keith, 1970. "Foreign Capital, Domestic Savings and Economic Development," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 32(2), pages 99-112, May.
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