Aid and Growth Evidence from Firm-level Data

Lisa Chauvet and Helene Ehrhart

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Abstract: This paper explores the impact of foreign aid on firms growth for a panel of 5,640 firms in 29 developing countries, 11 of which in Africa. Using the World Bank Enterprise Surveys data and controlling for fi rms fixed e ffects, we fi nd a positive impact of foreign aid on sales growth. This result is robust to various checks, notably to the instrumentation of aid. We then identify the main infrastructure obstacles to rms growth and examine whether foreign aid contributes to relaxing those constraints. We nd that electricity and transport are perceived as important constraints which tend to decrease the growth rate of fi rms, as well as the utilization of their productive capacity. Evidence on the impact of aid on infrastructure obstacles suggests that total aid and aid to the energy sector tend to decrease electricity obstacles. We also show that transport aid projects, geo-localized at the region level, tend to decrease the transport obstacles.

Keywords: Foreign aid; Firms growth; Infrastructures constraints (search for similar items in EconPapers)
Date: 2015-06
Note: View the original document on HAL open archive server: https://hal.science/hal-01516877v1
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Citations: View citations in EconPapers (3)

Published in AFSE 2015 64th Congress, Jun 2015, Rennes, France. pp.35

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Related works:
Journal Article: Aid and growth: evidence from firm-level data (2018)
Working Paper: Aid and Growth. Evidence from Firm-Level Data (2015)
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