Transfers and Transformations: Remittances, Foreign Aid, and Growth

Jonathan Temple, Huikang Ying and Patrick Carter ()

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: For many developing countries, international transfers are now a significant source of income. These transfers include official development aid, private charitable donations, and personal remittances. This paper uses dynamic one-sector and multi-sector models to isolate conditions under which transfers could promote growth and structural transformation. Although transfers bring welfare benefits, the effects on investment and growth are modest under isoelastic utility; where investment is profitable, it would be undertaken even in the absence of transfers. Larger effects on growth and sectoral structure emerge when preferences take the Stone-Geary form, since then low investment can co-exist with high returns to investment.

Keywords: foreign aid; remittances; cash transfers; economic growth; structural transformation. (search for similar items in EconPapers)
JEL-codes: F24 F35 O41 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-11-28, Revised 2014-12-02
New Economics Papers: this item is included in nep-gro
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:14/649

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