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Aid Effectiveness on Growth. A Meta Study

Author

Listed:
  • Hristos Doucouliagos
  • Martin Paldam

    () (Department of Economics, University of Aarhus, Denmark)

Abstract

The AEL (aid effectiveness literature) is econo¬metric studies of the macroeconomic effects of development aid. It contains about 100 papers of which 68 are reduced form estimates of the effect of aid on growth in the recipient country. The raw data show that growth is unconnected to aid, but the AEL has put so much structure on the data that all results possible have emerged. The present meta study considers both the best-set of the 68 papers and the all-set of 543 regressions published. Both sets have a positive average aid-growth elasticity, but it is small and insignificant: The AEL has not established that aid works. Using meta- regression analysis it is shown that about 20 factors influence the results. Much of the variation between studies is an artifact and can be attributed to publication outlet, institu¬ tional affiliation, and specification differences. However, some of the difference between studies is real. In particular, the aid-growth association is stronger for Asian countries, and the aid-growth association is shown to have been weaker in the 1970s.

Suggested Citation

  • Hristos Doucouliagos & Martin Paldam, 2005. "Aid Effectiveness on Growth. A Meta Study," Economics Working Papers 2005-13, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2005-13
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    Keywords

    Aid effectiveness; meta study; economic growth;

    JEL classification:

    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • F35 - International Economics - - International Finance - - - Foreign Aid

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    1. Aid effectiveness on growth: A meta study (EJPE 2008) in ReplicationWiki

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