Aid and growth: Asymmetric effects?

Leo M. Doerr

The Journal of Economic Asymmetries, 2025, vol. 31, issue C

Abstract: This study explores potential asymmetries in the relationship between development aid and economic growth. Our analysis reveals that while previous research identifies small positive growth effects of aid, these results stem from the adverse impact of aid reductions, with no corresponding positive effect from aid increases. This suggests that aid acts more as a substitute for domestic resources than as a catalyst for growth. Combining dynamic generalized method of moments techniques with asymmetric effect analysis, we provide a new methodological framework that addresses both unbalanced effects and endogeneity of aid, offering new insights into the aid-growth nexus.

Keywords: Aid effectiveness; Economic growth; Asymmetric effects (search for similar items in EconPapers)
JEL-codes: C33 O11 O40 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:31:y:2025:i:c:s1703494925000179

DOI: 10.1016/j.jeca.2025.e00417

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