K. C. Roy, Y. R. Vadlamudi - Does Larger Aid Necessarily Produce Greater Beneficial impact? Some Comments on Australian Aid to Bangladesh and India

Kartik Chandra Roy and Yugandhara Rao Vadlamudi
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Kartik Chandra Roy: Department of Economics, The University of Queensland, Postal: Brisbane, Queensland, Australia, Brisbane St Lucia QLD 4072 Australia, http://www.uq.edu.au/
Yugandhara Rao Vadlamudi: Department of Economics, The University of Queensland, Postal: Brisbane, Queensland, Australia, Brisbane St Lucia QLD 4072 Australia, http://www.uq.edu.au/

Economia Internazionale / International Economics, 1993, vol. 46, issue 2-3, 259-275

Abstract: This paper analyses the impact of Australian aid on Bangladesh and India in the light of prevailing theories on the relationship between aid and growth. The study shows that although the amount of Australian aid disbursed to Bangladesh was significantly larger than that disbursed to India, its impact on impertinent and consumption in Bangladesh were in no way- stronger than those in India. Moreover, the reverse impacts of aid on the donor’s economy appear to be considerably stronger than on the recipients’ economies These result suggest that (i) a proper analysis of the impact of aid should take the impacts on both the recipients’ and donor into consideration; (ii) since Australian aid produces strong reverse impact on the donor, Australia should increase its aid commitment and that (iii) since larger aid does not necessarily produce greater beneficial impact on the recipient, Australia should channel larger amounts of aid to those countries such as India which possess greater aid-absorptive capacities than countries such as Bangladesh.

Date: 1993
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