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Evaluating Aid Effectiveness in the Aggregate: Methodological Issues

  • Carl-Johan, Dalgaard
  • Henrik, Hansen

The purpose of the present Evaluation Study is to discuss the methodological problems researchers are facing in gauging the impact of aid on economic growth. The discussion is nontechnical and aimed at an audience without much prior knowledge in the fields of macroeconomics and econometrics. The paper provides insights into the following questions: 1. Why do economists view “aid effectiveness” as synonymous to asking whether aid increases growth in income per capita? 2. Why is it difficult to determine the macroeconomic impact of foreign aid on economic growth? 3. How is it, in principle, possible to solve the difficulties present in evaluating aggregate aid effectiveness?

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File URL: http://mpra.ub.uni-muenchen.de/23025/1/MPRA_paper_23025.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23025.

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Date of creation: Mar 2009
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Handle: RePEc:pra:mprapa:23025
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  1. Hansen, Henrik & Tarp, Finn, 1999. "Aid Effectiveness Disputed," MPRA Paper 62290, University Library of Munich, Germany.
  2. Raghuram Rajan & Arvind Subramanian, 2005. "Aid and Growth; What Does the Cross-Country Evidence Really Show?," IMF Working Papers 05/127, International Monetary Fund.
  3. Durlauf, Steven N & Johnson, Paul A, 1995. "Multiple Regimes and Cross-Country Growth Behaviour," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 365-84, Oct.-Dec..
  4. Sudhir Anand and Amartya Sen, 2000. "The Income Component of Human Development Index," Human Development Occasional Papers (1992-2007) HDOCPA-2000-01, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  5. Winford H. Masanjala & Chris Papageorgiou, 2008. "Rough and lonely road to prosperity: a reexamination of the sources of growth in Africa using Bayesian model averaging," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 671-682.
  6. Block, Steven A., 2001. "Does Africa grow differently?," Journal of Development Economics, Elsevier, vol. 65(2), pages 443-467, August.
  7. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2001. "On the Empirics of Foreign Aid and Growth," EPRU Working Paper Series 03-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Sep 2003.
  8. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  9. C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 17-41.
  10. Griffin, Keith B & Enos, J L, 1970. "Foreign Assistance: Objectives and Consequences," Economic Development and Cultural Change, University of Chicago Press, vol. 18(3), pages 313-27, April.
  11. Carl-Johan, Dalgaard & Henrik, Hansen, 2010. "Evaluating Aid Effectiveness in the Aggregate: A critical assessment of the evidence," MPRA Paper 23026, University Library of Munich, Germany.
  12. Sudhir Anand & Amartya Sen, 2000. "The Income Component of the Human Development Index," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 1(1), pages 83-106.
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