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Aid Effectiveness: A comparison of Tied and Untied Aid

  • Josepa Miquel-Florensa

    ()

    (Department of Economics, York University)

We evaluate the differential effects of Tied and Untied aid on growth, and how these effects vary with the policy environment of the recipient country. To do so, we use Burnside and Dollar (2000) and Easterly, Levine and Roodman (2003) datasets. We find that aid effectiveness is not significantly different for the two types of aid. However, when we condition on policies, we find that untied aid has a greater impact on growth than tied aid. We find that this difference is significant for the sample of low and middle-income countries, and is not statistically significant, but consistent in sign for the sub sample of low-income countries.

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File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/2007/April2007_TiedUntied.pdf
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Paper provided by York University, Department of Economics in its series Working Papers with number 2007_3.

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Length: 14 pages
Date of creation: Apr 2007
Date of revision:
Handle: RePEc:yca:wpaper:2007_3
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Web page: http://dept.econ.yorku.ca/

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  1. Svensson, Jakob, 2003. "Why conditional aid does not work and what can be done about it?," Journal of Development Economics, Elsevier, vol. 70(2), pages 381-402, April.
  2. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
  3. William Easterly & Ross Levine & David Roodman, 2004. "Aid, Policies, and Growth: Comment," American Economic Review, American Economic Association, vol. 94(3), pages 774-780, June.
  4. Dreher, Axel, 2002. "The development and implementation of IMF and World Bank conditionality," HWWA Discussion Papers 165, Hamburg Institute of International Economics (HWWA).
  5. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
  6. Raghuram G. Rajan & Arvind Subramanian, 2005. "What Undermines Aid's Impact on Growth?," NBER Working Papers 11657, National Bureau of Economic Research, Inc.
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