The effect of aid on growth: evidence from a Quasi-experiment
Lixin Xu () and
Journal of Economic Growth, 2017, vol. 22, issue 1, 1-33
Abstract The literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. This paper exploits an instrumental variable based on the fact that, since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59 % on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A 1 percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points.
Keywords: Aid effectiveness; Growth; Causal effect and Quasi-experiment (search for similar items in EconPapers)
JEL-codes: O1 O4 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10887-016-9137-4 Abstract (text/html)
Access to full text is restricted to subscribers.
Working Paper: The Effect of Aid on Growth: Evidence from a Quasi-Experiment (2016)
Working Paper: The effect of aid on growth: evidence from a quasi-experiment (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:jecgro:v:22:y:2017:i:1:d:10.1007_s10887-016-9137-4
Ordering information: This journal article can be ordered from
http://www.springer. ... th/journal/10887/PS2
Access Statistics for this article
Journal of Economic Growth is currently edited by Oded Galor
More articles in Journal of Economic Growth from Springer
Bibliographic data for series maintained by Sonal Shukla ().