Foreign aid and growth

Mehmet Eris ()
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Mehmet Eris: Organisation for Economic Co-operation and Development

Economics Bulletin, 2008, vol. 15, issue 14, pages 1-14

Abstract: Burnside and Dollar (2000) (BD) ignite a policy debate by claiming that foreign aid works only in good policy environments. This result, however, has been criticized by a number of studies on numerous statistical grounds concluding that the BD result is too fragile. I revisit the aid-growth relationship using Bayesian Model Averaging techniques to account for uncertainty issues regarding model specification. I find that the data evidence does not support the claim that aid works only in good policy environments. My analysis also suggests that aid flows are not very effective in boosting growth regardless of the quality of the policy environment.

Keywords: Foreign Aid; Growth; Model Uncertainty (search for similar items in EconPapers)
JEL-codes: O1 (search for similar items in EconPapers)
Date: 2008-08-26
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