Aid and Local Growth in Malawi

Daniel Chris Khomba and Alex Trew

Journal of Development Studies, 2022, vol. 58, issue 8, 1478-1500

Abstract: We study the local impact of foreign aid allocated to districts and constituencies in Malawi over the period 1999–2013 using a highly detailed new aid database that includes annual disbursements at each project location. First, we show using household panel surveys that growth in light density is a good proxy for growth in per capita consumption. Second, we introduce a new dataset that permits a novel instrumental variables strategy. We find a consistent and quantitatively significant relationship between aid and growth. Constituency-level regressions point to a larger effect than at district level, suggesting that aid is associated with some relocation of activity across space but not enough to make the net effect zero. The effect on growth is at its highest immediately after its disbursement, and falls to close to zero in subsequent years, implying that foreign aid has a level effect on incomes but does not stimulate sustained growth. Aid delivered as a grant is positively related with growth, while that given as a loan is not.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://hdl.handle.net/10.1080/00220388.2022.2032668 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jdevst:v:58:y:2022:i:8:p:1478-1500

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/FJDS20

DOI: 10.1080/00220388.2022.2032668

Access Statistics for this article

Journal of Development Studies is currently edited by Howard White, Oliver Morrissey and Ken Shadlen

More articles in Journal of Development Studies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().