The Macroeconomic Effects of Foreign Aid: A Survey
University of St. Gallen Economics Discussion Paper No. 2004-11
28 Pages Posted: 13 Sep 2004
Date Written: September 2004
Research on the macroeconomic effects of aid has expanded rapidly in recent years. In this paper, we provide a survey of this literature. We start by reviewing some theoretical models that suggest a positive impact of aid on investment and growth. We then discuss the empirical evidence, giving particular attention to the role of institutions and policies in determining aid effectiveness. As a general conclusion, we suggest adopting a more disaggregate perspective with respect both to different types of aid and to various aspects of governance.
Keywords: Foreign aid, economic growth, institutions, governance
JEL Classification: F35, F43, O16, O19
Suggested Citation: Suggested Citation