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Aid and Growth Evidence from Firm-level Data

Author

Listed:
  • Lisa Chauvet

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)

  • Hélène Ehrhart

    (Banque de France - Banque de France)

Abstract

This paper explores the impact of foreign aid on firms growth for a panel of 5,640 firms in 29 developing countries, 11 of which in Africa. Using the World Bank Enterprise Surveys data and controlling for fi rms fixed e ffects, we fi nd a positive impact of foreign aid on sales growth. This result is robust to various checks, notably to the instrumentation of aid. We then identify the main infrastructure obstacles to rms growth and examine whether foreign aid contributes to relaxing those constraints. We nd that electricity and transport are perceived as important constraints which tend to decrease the growth rate of fi rms, as well as the utilization of their productive capacity. Evidence on the impact of aid on infrastructure obstacles suggests that total aid and aid to the energy sector tend to decrease electricity obstacles. We also show that transport aid projects, geo-localized at the region level, tend to decrease the transport obstacles.

Suggested Citation

  • Lisa Chauvet & Hélène Ehrhart, 2015. "Aid and Growth Evidence from Firm-level Data," Post-Print hal-01516877, HAL.
  • Handle: RePEc:hal:journl:hal-01516877
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01516877
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    Cited by:

    1. Axel Dreher & Steffen Lohmann, 2015. "Aid and growth at the regional level," Oxford Review of Economic Policy, Oxford University Press, vol. 31(3-4), pages 420-446.

    More about this item

    Keywords

    Foreign aid; Firms growth; Infrastructures constraints;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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