Aid and the Growth of Income in Aid-Favoured Developing Countries: Policy Issues

Havelock Brewster and Dickson Yeboah

Cambridge Journal of Economics, 1994, vol. 18, issue 2, 145-62

Abstract: An examination of statistical trends in selected variables for the most aid-favored of the developing countries suggests that GNP has not been responsive to aid. More formal econometric experiments yield a similar conclusion, but do not, however, advance our understanding of the aid-GNP relationship since they are subject to serious shortcomings. Adverse terms of trade, meager returns to investment and low labor productivity are shown to go a long way in accounting for poor GNP performance. Whatever the results of quantitative studies, there is a broader concern that in many developing countries aid does not seem to be laying the basis for self-sustained development. The authors are critical of contemporary aid policy orientations and propose certain shifts of emphasis in the use of aid aimed at initiating a planned and sustainable process of economic growth. Copyright 1994 by Oxford University Press.

Date: 1994
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