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Development Aid and Growth: An association converging to zero

  • Hristos Doucouliagos

    (Deakin University, Melbourne, Australia)

  • Martin Paldam

    ()

    (School of Economics and Management, Aarhus University, Denmark)

This note deals with a paradox: A literature growing exponentially in spite of the fact that it keeps finding the same result. We draw upon the findings of 106 empirical studies, of which 32 appeared in the last 4 years, to examine whether development aid generates economic growth. The studies report aid effects that have been steadily falling over time. The newer studies find a steady continuation of the downward trend. Using meta-regression analysis, we show that total aid has never had an effect on economic growth. Theoretically, this result might be due to simultaneity bias, but the evidence does not support this notion. There is some evidence that some aid components do have a positive effect on growth.

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File URL: ftp://ftp.econ.au.dk/afn/wp/09/wp09_17.pdf
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Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2009-17.

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Length: 10
Date of creation: 28 Dec 2009
Date of revision:
Handle: RePEc:aah:aarhec:2009-17
Contact details of provider: Web page: http://www.econ.au.dk/afn/

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  1. Felicitas Nowak-Lehmann D. & Inmaculada Martínez-Zarzoso & Dierk Herzer & Stephan Klasen & Axel Dreher, 2009. "In Search for a Long-run Relationship between Aid and Growth: Pitfalls and Findings," Ibero America Institute for Econ. Research (IAI) Discussion Papers 196, Ibero-America Institute for Economic Research.
  2. J. Bradford De Long & Kevin Lang, . "Are All Economic Hypotheses False?," J. Bradford De Long's Working Papers _117, University of California at Berkeley, Economics Department.
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