Aid, Spending Strategies and Productivity Effects - A Multi-Sectoral CGE Analysis for Zambia

33 Pages Posted: 22 Oct 2009

See all articles by Volker Clausen

Volker Clausen

University of Duisburg-Essen - Faculty of Economic Science

Hannah Schürenberg-Frosch

University of Duisburg-Essen

Date Written: July 1, 2009

Abstract

Numerous econometric studies fail to detect a significant and robust relationship between international aid and economic growth in the recipient countries. Dutch Disease effects might be responsible for this result.This paper examines the relation between aid and its effectiveness in a multi-sector multihousehold Computable General Equilibrium (CGE)-framework. Given that international transfers to African countries increasingly take the form of general financial support to the government, different spending strategies and their macroeconomic, sectoral and distributional effects are evaluated in a two-stage simulation making a distinction between immediate direct effects and possible long-run effects from increased productivity. While the model simulates the effects of additional aid in Zambia it can be used as a blueprint for other African countries.

Keywords: Foreign aid, applied general equilibrium, Zambia, Dutch Disease, productivity

JEL Classification: O19, O55, F35

Suggested Citation

Clausen, Volker and Schürenberg-Frosch, Hannah, Aid, Spending Strategies and Productivity Effects - A Multi-Sectoral CGE Analysis for Zambia (July 1, 2009). Ruhr Economic Paper No. 127, Available at SSRN: https://ssrn.com/abstract=1492151 or http://dx.doi.org/10.2139/ssrn.1492151

Volker Clausen

University of Duisburg-Essen - Faculty of Economic Science ( email )

FB5- International Economics Universitaetsstr. 12
45117 Essen
Germany
+49 201 183-3655 (Phone)
+49 201 183-3974 (Fax)

Hannah Schürenberg-Frosch (Contact Author)

University of Duisburg-Essen ( email )

Universitätsstr. 12
Essen, 45117
Germany
+49 201 183 3010 (Phone)
+49 201 183 3974 (Fax)

HOME PAGE: http://www.iwb.wiwi.uni-due.de/team/hannah-schuerenberg/

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