The Return to Foreign Aid
Carl-Johan Dalgaard () and
Henrik Hansen ()
Journal of Development Studies, 2017, vol. 53, issue 7, 998-1018
We estimate the average rate of return on investments financed by aid and by domestic resource mobilisation, using aggregate data. Both returns are expected to vary across countries and time. Consequently we develop a correlated random coefficients model to estimate the average returns. Across different estimators and two different data sources for GDP and investment our findings are remarkably robust; the average gross return on â€˜aid investmentsâ€™ is about 20 per cent. This is in accord with micro estimates of the economic rate of return on aid projects and with aggregate estimates of the rate of return on public capital.
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Working Paper: The return to foreign aid (2015)
Working Paper: The Return to Foreign Aid (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jdevst:v:53:y:2017:i:7:p:998-1018
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