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

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

Abstract

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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  • Channing, Arndt & Jones, Sam & Tarp, Finn, 2010. "Aid, Growth, and Development Have We Come Full Circle?," WIDER Working Paper Series 096, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2010-96
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    Keywords

    Foreign aid; growth; aid effectiveness; causal effects;

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