Inequality, aid and growth: Macroeconomic impact of aid grants and loans in Latin America and the Caribbean

Sergio Tezanos, Ainoa Quiñones and Marta Guijarro
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Sergio Tezanos: University of Cantabria
Ainoa Quiñones: University of Cantabria
Marta Guijarro: University of Cantabria

Journal of Applied Economics, 2013, vol. 16, 153-177

Abstract: Aid effectiveness in Latin America and the Caribbean (LAC) has been little studied, despite the fact that it is the developing region receiving foreign aid with the highest per capita income and inequality levels. This paper uses a growth regression model to analyze the impact of Official Development Assistance (ODA) in LAC. We evaluate ODA effectiveness in relation to the growth rate of an ‘inequality-adjusted GDP per capita’ in order to precisely define the desired impact of aid in a region with high levels of inequality. The estimation produces three main results: aid is effective, in aggregated terms, once we deal with the effect of income inequalities; the impact of concessional loans seems to be

Keywords: aid effectiveness; Latin America and the Caribbean (LAC); economic growth; inequality; aid grants; concessional loans; Official Development Assistance (ODA) : (search for similar items in EconPapers)
JEL-codes: C5 F35 I30 O19 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:16:y:2013:n:1:p:153-177

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