 Aid and Economic Growth: A Robust ApproachKwabena Gyimah-Brempong and Jeffrey Racine Journal of African Development, 2014, vol. 16, issue 1, 1-35 Abstract: This paper uses panel data and the Local Linear Kernel Estimator (LLKE) to investigate the effects of aid on economic growth in developing countries. Specifically, we investigate the robustness of a popular parametric specification of the aid/economic growth relationship in Less Developed countries (LDCs). First, we find that aid has a significant impact on economic growth given the support of the sample data we use. However, the effect depends on how aid is measured. We find a positive growth effect when aid is measured asaidgni but no significant growth effect when aid is measured as aidpercap. Second, we find some evidence of increasing returns to aidgni. Finally, we find that a "good" policy environment increases the effectiveness of aid in LDCs, all things equal. The impact of the policy environment on growth varies according to how the policy environment is measured. Our results generally support the popular quadratic parametric specification of the aid/growth relationship. Our results have implications for aid policy and for research on the effectiveness of aid. Keywords: Aid; Economic Growth; Investment; Developing Countries; Robustness Tests; Nonparametric Regression; Policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:afe:journl:v:16:y:2014:i:1:p:1-35 Access Statistics for this article More articles in Journal of African Development from African Finance and Economic Association (AFEA) Contact information at EDIRC. |
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