 Foreign aid and free trade and their effect on income: a panel analysisAbdiweli M. Ali and
Hodan Said. Isse ()
Journal of Developing Areas, 2007, vol. 41, issue 1, 127-142 Abstract: This paper uses a panel approach and annual observations of over 150 countries for the period 1975 – 2000 to examine the impact of foreign aid and trade on income. The paper addresses the simultaneity of international trade, foreign aid and economic performance by using a full information system or three-stage least squares approach. The findings of this paper strongly suggest that foreign aid and trade are strong determinants of GDP per worker, albeit in opposite directions. The regression results are robust to the inclusion of a multitude of exogenous variables that are considered to be determinants of GDP per worker. Foreign aid is a commonly owned resource, powerful individuals and state heads establish property right in the system and, as a result, rent extractors expend resources resisting deregulation that attempt to remove that privilege. On the other hand, the empirical evidence reaffirms that international trade appears complementary to economic performance. Keywords: Foreign Aid; Free Trade; Economic Growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.41:year:2007:issue1:pp:127-142 Access Statistics for this article More articles in Journal of Developing Areas from Tennessee State University, College of Business Contact information at EDIRC. |
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