Aid and Growth: What Does the Cross-Country Evidence Really Show?

Raghuram Rajan and Arvind Subramanian

No 11513, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the effects of aid on growth in cross-sectional and panel data—after correcting for the possible bias that poorer (or stronger) growth may draw aid contributions to recipient countries. Even after this correction, we find little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth. We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings suggest that for aid to be effective in the future, the aid apparatus will have to be rethought.

Date: 2005-08
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Published as Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, 06.

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Journal Article: Aid and Growth: What Does the Cross-Country Evidence Really Show? (2008)
Working Paper: Aid and Growth: What Does The Cross-Country Evidence Really Show? (2005)
Working Paper: Aid and Growth: What Does the Cross-Country Evidence Really Show? (2005)
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