Tied to Capital or Untied Foreign Aid?

Michael Michael and Charles Marrewijk

Review of Development Economics, 1998, vol. 2, issue 1, 61-75

Abstract: A two‐country trade model of foreign aid is developed. The aid‐receiving country suffers from Harris‐Todaro type unemployment. Aid is either untied, tied to sector‐specific capital, or tied to intersectorally mobile capital. These types of aid are compared by examining their terms‐of‐trade and welfare effects to show that (i) welfare paradoxes are possible, (ii) the world as a whole may gain from aid, (iii) a conflict of interest concerning the type of aid may arise between donor and recipient, and (iv) under plausible conditions untied aid is better for the recipient and the world.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://doi.org/10.1111/1467-9361.00028

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:rdevec:v:2:y:1998:i:1:p:61-75

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1363-6669

Access Statistics for this article

Review of Development Economics is currently edited by E. Kwan Choi

More articles in Review of Development Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().