Intertemporal Distribution of Foreign Aid
We analyze the dynamic effects of foreign aid on the economic growth and welfare of a recipient countries. Based on an overlapping generations model with a productive capital, foreign aid is characterized by its uses: whether it takes a form of income compensation (income aid) or capital stock (capital aid), and by its recipients: which generation(s) or institution hold(s) its ownership. We found some different results from those of the traditional wisdom of foreign aid. First, foreign aid tends to be less efficient without any condition to the recipient. Second, capital aid can be more efficient than income aid, and its efficiency could be even higher when capital aid is loaned in stead of being granted. Third, a stable relationship between the donors and the recipient may harm the efficiency of foreign aid.
|Date of creation:||Aug 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.rieti.go.jp/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:07048. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko)
If references are entirely missing, you can add them using this form.