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The Aid Effectiveness Literature. The Sad Result of 40 Years of Research

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  • Hristos Doucouliagos
  • Martin Paldam

    (Department of Economics, University of Aarhus, Denmark)

Abstract

The AEL consists of empirical macro studies of the effects of development aid. At the end of 2004 it had reached 97 studies of three families, which we have summarized in one study each using meta-analysis. Studies of the effect on investments show that they rise by 1/3 of the aid – the rest is crowded out by a fall in savings. Studies of the effect on growth show an insignificant positive effect. Studies of the effect on growth, conditional on something else, have till now shown weak results. The Dutch Disease effect of aid has been ignored. The best aggregate estimate is that since its start in the early 1960s aid has increased the standard of living in the poor countries by 20%.

Suggested Citation

  • Hristos Doucouliagos & Martin Paldam, 2005. "The Aid Effectiveness Literature. The Sad Result of 40 Years of Research," Economics Working Papers 2005-15, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2005-15
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    More about this item

    Keywords

    Aid effectiveness; meta study; accumulation; growth;
    All these keywords.

    JEL classification:

    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F35 - International Economics - - International Finance - - - Foreign Aid

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