A Dynamic Analysis of Tied Aid

Bharat Hazari, Jean-Pierre Laffargue (), Chi-Chur Chao () and Eden Yu
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Jean-Pierre Laffargue: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Chi-Chur Chao: CUHK - The Chinese University of Hong Kong [Hong Kong]

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Abstract: In this paper we examine the impact of tied aid on capital accumulation and welfare in the presence of a quota on imports. Using a simulation model we establish that tied aid can lower the relative domestic price of the manufactured good and therefore reduce the stock of capital. In the presence of a strong production externality from capital accumulation and high tying ratio, tied aid may immiserize the recipient country.

Keywords: Tied aid; Quotas; Capital; Welfare (search for similar items in EconPapers)
Date: 2007
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00270896v1
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Published in Sajal Lahiri. Theory and Practice of Foreign Aid, Elsevier, Amsterdam, pp.173-183, 2007, Frontiers of Economics and Globalization

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Working Paper: A Dynamic Analysis of Tied Aid (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00270896

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