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Foreign Aid, Infrastructure Development and Welfare: An Intertemporal Analysis

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  • Slobodan Djajić

Abstract

The author examines the welfare implications of foreign aid within the framework of a two-period, two-country model of international trade. It is up to the donor country to decide what fraction of any given aid package is to be made available for the recipient's immediate consumption in period one, and what part should be allocated for investment in infrastructure that expands the recipient's production possibilities in period two. The focus of the analysis is on the conditions under which both countries agree or disagree on the manner in which the aid funds should be divided between the two options. Copyright 2009 The Author. Journal compilation 2009 Blackwell Publishing Ltd.

Suggested Citation

  • Slobodan Djajić, 2009. "Foreign Aid, Infrastructure Development and Welfare: An Intertemporal Analysis," Review of Development Economics, Wiley Blackwell, vol. 13(s1), pages 393-402, August.
    • Handle: RePEc:bla:rdevec:v:13:y:2009:i:s1:p:393-402
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    References listed on IDEAS

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    1. Hatzipanayotou, Panos & Michael, Michael S., 1995. "Foreign aid and public goods," Journal of Development Economics, Elsevier, vol. 47(2), pages 455-467, August.
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    Cited by:

    1. Stephen M. Miller & Kyriakos C. Neanidis, 2012. "Demographic Transition and Economic Welfare: The Role of Humanitarian Aid," Working papers 2012-06, University of Connecticut, Department of Economics.

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