Development Aid and Economic Growth: A Positive Long-Run Relation

May 1, 2009

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

We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two kinds of aid: developmental and non-developmental. Second, our specifications allow for the effect of aid on economic growth to occur over long periods. Our results indicate that developmental aid promotes long-run growth. The effect is significant, large and robust to different specifications and estimation techniques.

Subject: Aid flows, Bilateral aid, Development assistance, Foreign aid, Personal income

Keywords: aid-quality donor ranking, development aid, donor characteristic, donor country, donor nation, donor-recipient match, growth rate, WP

Pages:
32
Volume:
2009
DOI:
https://doi.org/10.5089/9781451872651.001
Issue:
118
Series:
Working Paper No. 2009/118
Stock No:
WPIEA2009118
ISBN:
9781451872651
ISSN:
1018-5941

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