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Foreign aid and growth

Author

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  • Mehmet Eris

    (Organisation for Economic Co-operation and Development)

Abstract

Burnside and Dollar (2000) (BD) ignite a policy debate by claiming that foreign aid works only in good policy environments. This result, however, has been criticized by a number of studies on numerous statistical grounds concluding that the BD result is too fragile. I revisit the aid-growth relationship using Bayesian Model Averaging techniques to account for uncertainty issues regarding model specification. I find that the data evidence does not support the claim that aid works only in good policy environments. My analysis also suggests that aid flows are not very effective in boosting growth regardless of the quality of the policy environment.

Suggested Citation

  • Mehmet Eris, 2008. "Foreign aid and growth," Economics Bulletin, AccessEcon, vol. 15(14), pages 1-14.
    • Handle: RePEc:ebl:ecbull:eb-08o10017
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    References listed on IDEAS

    as
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    10. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
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    Cited by:

    1. León-González, Roberto & Montolio, Daniel, 2015. "Endogeneity and panel data in growth regressions: A Bayesian model averaging approach," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 23-39.

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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