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Aid Effectiveness: A comparison of Tied and Untied Aid

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  • Josepa Miquel-Florensa

    () (Department of Economics, York University)

Abstract

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.

Suggested Citation

  • Josepa Miquel-Florensa, 2007. "Aid Effectiveness: A comparison of Tied and Untied Aid," Working Papers 2007_3, York University, Department of Economics.
  • Handle: RePEc:yca:wpaper:2007_3
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    File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/2007/April2007_TiedUntied.pdf
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    References listed on IDEAS

    as
    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. Dreher, Axel, 2002. "The development and implementation of IMF and World Bank conditionality," HWWA Discussion Papers 165, Hamburg Institute of International Economics (HWWA).
    3. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
    4. Arvind Subramanian & Raghuram Rajan, 2005. "What Undermines Aid’s Impact on Growth?," IMF Working Papers 05/126, International Monetary Fund.
    5. 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.
    6. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Minoiu, Camelia & Reddy, Sanjay G., 2010. "Development aid and economic growth: A positive long-run relation," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 27-39, February.
    2. Bah, El-hadj M. & Ward, Jeremy, 2011. "Effectiveness of foreign aid in Small Island Developing States," MPRA Paper 32062, University Library of Munich, Germany.
    3. Kyriakos C. Neanidis, 2012. "Humanitarian Aid, Fertility and Economic Growth," Economica, London School of Economics and Political Science, vol. 79(313), pages 27-61, January.
    4. repec:bla:rdevec:v:21:y:2017:i:4:p:1425-1447 is not listed on IDEAS

    More about this item

    Keywords

    Foreign Aid; Aid Contracts; Tied and Untied Aid;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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