Aid and Growth in Malawi
We study the impact on the growth of foreign aid flows to districts in Malawi over the period 2000–13. To isolate a causal impact on growth, we employ two exogenous determinants of within-country aid disbursement: First, the ethnic affinity of a district with the sitting President; second, the portion of Parliamentarians in a district that are susceptible into induced political defections. Using these instru- ments, alone or together, we identify a robust and quantitatively significant role for aid flows in causing higher growth in light density. We find a hump-shaped growth response over the course of three years. Bilateral aid appears to be better in causing growth than multilateral aid while grants have more impact than loans.
|Date of creation:||04 Nov 2016|
|Date of revision:||14 Jun 2017|
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