Foreign Aid, Infrastructure Development, and Welfare: An Intertemporal Analysis

Slobodan Djajić

No RP2008-64, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper examines the welfare implications of foreign aid within the framework of a two-period, two-country model of international trade. It is up to the donor country to decide what fraction of any given aid package is to be made available for the recipient's immediate, period-one consumption, and what part should be allocated for investment in infrastructure that expands the recipient's production possibilities in period two.

Keywords: Capital investments; Economic assistance and foreign aid; Game theory; International trade (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-dev
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