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Are There Negative Returns to Aid? A Comment

Author/Editor: Nkusu, Mwanza
Authorized for Distribution: November 1, 2004
Electronic Access: Free Full Text (PDF file size is 357KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Amid controversies surrounding aid effectiveness, an increasing number of empirical studies find support for the idea that aid can spur growth and that the aid-growth relationship is nonlinear. Lensink and White propose a model to illustrate the possible existence of what has been labeled an "aid Laffer curve." This short paper highlights the model's weaknesses and suggests that the model does not fulfill the purpose of illustrating the possible existence of negative returns to aid.
Series: Working Paper No. 04/212
Subject(s): Development assistance | Economic growth | Poverty
Author's keyword(s): Foreign Aid | Economic Growth | Poverty
    Published:   November 1, 2004        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2122004   Pages:   11
    Price:   US$15.00
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