AID, POLICIES, AND GROWTH: WHY SO MUCH CONFUSION?

Shaomeng Jia and Claudia R. Williamson
Authors registered in the RePEc Author Service: Claudia Williamson Kramer

Contemporary Economic Policy, 2019, vol. 37, issue 4, 577-599

Abstract: We revisit the highly debated aid‐policy‐growth association. Our results overturn Burnside and Dollar's original findings by simply using new data over the same countries and years. Marginal effects from the extended sample (1962–2013) provide weak evidence that aid can promote growth in the presence of good policies. Post‐Cold War (1990–2013) analysis, however, reveals that aid can decrease growth at any level of policy. The overwhelming majority of the results suggest aid conditional on policy is ineffective. This debate continues because the results are highly sensitive to country‐year selection, choice of methodology, measurement of institutional quality, and growth rate measurement. (JEL F35, O23, O40)

Date: 2019
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