Development Aid and Growth: An association converging to zero

TY - UNPB

T1 - Development Aid and Growth: An association converging to zero

AU - Doucouliagos,, Hristos

AU - Paldam, Martin

N1 - Published in 2011 as The ineffectiveness of development aid on growth: An update

PY - 2009

Y1 - 2009

N2 - This note deals with a paradox: A literature growing exponentially in spite of the fact that it keeps finding the same result. We draw upon the findings of 106 empirical studies, of which 32 appeared in the last 4 years, to examine whether development aid generates economic growth. The studies report aid effects that have been steadily falling over time. The newer studies find a steady continuation of the downward trend. Using meta-regression analysis, we show that total aid has never had an effect on economic growth. Theoretically, this result might be due to simultaneity bias, but the evidence does not support this notion. There is some evidence that some aid components do have a positive effect on growth.

AB - This note deals with a paradox: A literature growing exponentially in spite of the fact that it keeps finding the same result. We draw upon the findings of 106 empirical studies, of which 32 appeared in the last 4 years, to examine whether development aid generates economic growth. The studies report aid effects that have been steadily falling over time. The newer studies find a steady continuation of the downward trend. Using meta-regression analysis, we show that total aid has never had an effect on economic growth. Theoretically, this result might be due to simultaneity bias, but the evidence does not support this notion. There is some evidence that some aid components do have a positive effect on growth.

KW - Aid effectiveness, meta-regression analysis, economic growth

M3 - Working paper

BT - Development Aid and Growth: An association converging to zero

PB - Institut for Økonomi, Aarhus Universitet

CY - Aarhus

ER -