Does Foreign Aid Improve Human Capital? Fertility Rates as a Moderator

Woojin Kim and Yu Ri Kim ()
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Woojin Kim: Hanyang University, Republic of Korea
Yu Ri Kim: Hanyang University, Republic of Korea

Journal of Economic Development, 2025, vol. 50, issue 1, 45-66

Abstract: This paper aims to analyze the effect of foreign aid on human capital and examines whether the fertility rate moderates this relationship. Using dynamic panel data from 119 aid recipient countries from 2002 to 2022, the results indicate that foreign aid is positively associated with human capital development measured by Human Development Index (HDI). The findings also show that fertility rates negatively moderate the impact of foreign aid on human capital. This suggests that foreign aid is less effective in improving human capital in countries with high fertility rates, highlighting the importance of incorporating measures that account for fertility rates in aid policies.

Keywords: Foreign Aid; Human Capital; Fertility Rates; Official Development Assistance (ODA); Human Development Index (HDI); Aid Effectiveness (search for similar items in EconPapers)
JEL-codes: C23 F35 J13 O15 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jecdev:0107

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