Aid effectiveness, governance and public investment

Hidefumi Kasuga and Yuichi Morita

Economic Modelling, 2012, vol. 29, issue 2, 514-521

Abstract: In this paper, we develop a growth model in which aid finances infrastructure investment and pro-poor spending in order to analyze ways through which aid can be made more effective. We assume that the recipient countries are aid-dependent in the early phase of development and that they ultimately become independent. In the model, donors can accelerate a recipient's independence from aid by investing in infrastructure. We demonstrate that even a small increase in aid can improve aid effectiveness and that aid effectiveness depends more on the growth rate than on the efficiency of the government.

Keywords: Aid effectiveness; Governance; Infrastructure; Pro-poor expenditure (search for similar items in EconPapers)
JEL-codes: F35 O11 O20 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:29:y:2012:i:2:p:514-521

DOI: 10.1016/j.econmod.2011.12.009

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