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Aid, Growth, and Development Have We Come Full Circle?

  • Channing, Arndt
  • Jones, Sam
  • Tarp, Finn

The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, recent literature doubts the ability of foreign aid to foster economic growth and development. This paper assesses the aid-growth literature and, taking inspiration from the program evaluation literature, we re-examine key hypotheses. In our findings, aid has a positive and statistically significant causal effect on growth over the long run, with confidence intervals conforming to levels suggested by growth theory. Aid remains a key tool for enhancing the development prospects of poor countries.

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File URL: http://www.wider.unu.edu/sites/default/files/wp2010-96.pdf
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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number wp2010-96.

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Length: 38 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:unu:wpaper:wp2010-96
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  1. Maurice J.G. Bun & Frank Windmeijer, 2009. "The Weak Instrument Problem of the System GMM Estimator in Dynamic Panel Data Models," Tinbergen Institute Discussion Papers 09-086/4, Tinbergen Institute.
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  13. Papanek, Gustav F, 1972. "The Effect of Aid and other Resource Transfers on Savings and Growth in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 82(327), pages 934-50, September.
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  15. Channing, Arndt & Jones, Sam & Tarp, Finn, 2010. "Aid, Growth, and Development Have We Come Full Circle?," Working Paper Series wp2010-96, World Institute for Development Economic Research (UNU-WIDER).
  16. Daron Acemoglu & Simon Johnson, 2007. "Disease and Development: The Effect of Life Expectancy on Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 925-985, December.
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  19. James J. Heckman, 2001. "Micro Data, Heterogeneity, and the Evaluation of Public Policy: Nobel Lecture," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 673-748, August.
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