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Aid effectiveness disputed

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  • Henrik Hansen
  • Finn Tarp

Abstract

There is a widespread perception among academic researchers and aid practitioners alike that empirical cross‐country analysis fails to find any significant link between aid flows and growth, and that aid is successful only when associated with good policies in the recipient countries. These positions do not stand up to careful scrutiny of existing studies. In this paper, we offer a re‐examination of the literature on the aid–savings, aid–investment, and aid–growth relationships, and a comparative appraisal of more recent research contributions. Using an analytic framework for evaluating the empirical work, a coherent and positive picture of the aid–growth link emerges. There is a robust aid–growth link even in countries hampered by an unfavourable policy environment. © 2016. The Authors. Journal of International Development published by John Wiley & Sons, Ltd.

Suggested Citation

  • Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398, April.
    • Handle: RePEc:wly:jintdv:v:12:y:2000:i:3:p:375-398
    DOI: 10.1002/(SICI)1099-1328(200004)12%3A3%3C375%3A%3AAID-JID657%3E3.0.CO%3B2-M
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    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

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