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Aid Effectiveness: Opening the Black Box

Channing Arndt (), Sam Jones () and Finn Tarp ()

No 44, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Controversy over the aggregate impact of foreign aid has focused on reduced form estimates of the aid-growth link. The causal chain, through which aid affects developmental outcomes including growth, has received much less attention. We address this gap by: (i) specifying a structural model of the main relationships; (ii) estimating the impact of aid on a range of final and intermediate outcomes; and (iii) quantifying a simplied representation of the full structural form, where aid impacts on growth through key intermediate outcomes. A coherent picture emerges: aid stimulates growth and reduces poverty through physical capital investment and improvements in health.

Keywords: growth; foreign aid; aid effectiveness; simultaneous equations (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-dev and nep-fdg
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:wp2011-44

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