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Development Aid and Economic Growth: A Positive Long-Run Relation

Sanjay Reddy and Camelia Minoiu

Working Papers from United Nations, Department of Economics and Social Affairs

Abstract: We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two components of aid: a developmental, growth-enhancing component, and a geopolitical, possibly growth-depressing component. Second, our specifications allow for the effect of aid on economic growth to occur over long time-lags. Our results indicate that developmental aid promotes long-run growth. The effect is large and robustly significant, and withstands an array of robustness checks including alternative specifications, choices of the proxy for development aid, and treatments of outliers.

Keywords: official development assistance; economic growth (search for similar items in EconPapers)
JEL-codes: O1 O2 O4 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2006-09
New Economics Papers: this item is included in nep-dev and nep-fdg
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http://www.un.org/esa/desa/papers/2006/wp29_2006.pdf (application/pdf)

Related works:
Journal Article: Development aid and economic growth: A positive long-run relation (2010) Downloads
Working Paper: Development Aid and Economic Growth: A Positive Long-Run Relation (2009) Downloads
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