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Aid Does Matter, After All: Revisiting the Relationship Between Aid and Growth

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  • Camelia Minoiu
  • Sanjay Reddy

Abstract

Recent influential studies among development economists claim that aid to developing countries is not nearly as beneficial to recipient nations as had been expected. Are these statistical analyses right? One problem is that total aid, on which most studies are based, includes two distinct kinds of aid. The first is what we might call "developmental" aid, and the second, geopolitical aid. When the authors focus only on the first kind of aid, they find strong correlations between the level of such aid and average economic growth experienced over the long term. Moreover, they do not find that aid is more effective under specific policy conditions.

Suggested Citation

  • Camelia Minoiu & Sanjay Reddy, 2007. "Aid Does Matter, After All: Revisiting the Relationship Between Aid and Growth," Challenge, Taylor & Francis Journals, vol. 50(2), pages 39-58.
    • Handle: RePEc:mes:challe:v:50:y:2007:i:2:p:39-58
    DOI: 10.2753/0577-5132500203
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    Cited by:

    1. Jomo Kwame Sundaram & Rudiger von Arnim, 2008. "Economic liberalization and constraints to development in sub-Saharan africa," Working Papers 67, United Nations, Department of Economics and Social Affairs.
    2. Daniel L. Nielson & Bradley Parks & Michael J. Tierney, 2017. "International organizations and development finance: Introduction to the special issue," The Review of International Organizations, Springer, vol. 12(2), pages 157-169, June.
    3. Audrey Rose Menard, 2014. "Do natural resources condition the aid-governance relationship? Evidence from Africa," Economics Bulletin, AccessEcon, vol. 34(2), pages 1317-1326.
    4. Okullo, Samuel J. & Reynès, Frédéric, 2011. "Can reserve additions in mature crude oil provinces attenuate peak oil?," Energy, Elsevier, vol. 36(9), pages 5755-5764.
    5. Felicitas Nowak-Lehmann & Axel Dreher & Dierk Herzer & Stephan Klasen & Inmaculada Martínez-Zarzoso, 2012. "Does foreign aid really raise per capita income? A time series perspective," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 288-313, February.
    6. Felicitas Nowak-Lehmann D. & Inmaculada Martínez-Zarzoso & Dierk Herzer & Stephan Klasen & Axel Dreher, 2009. "In Search for a Long-run Relationship between Aid and Growth: Pitfalls and Findings," Ibero America Institute for Econ. Research (IAI) Discussion Papers 196, Ibero-America Institute for Economic Research.
    7. Michael G. Findley & Helen V. Milner & Daniel L. Nielson, 2017. "The choice among aid donors: The effects of multilateral vs. bilateral aid on recipient behavioral support," The Review of International Organizations, Springer, vol. 12(2), pages 307-334, June.
    8. Ronald Kumar, 2014. "Exploring the nexus between capital inflows and growth in Latin America and the Caribbean: a study of clusters led by Brazil and Mexico," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2537-2552, September.
    9. Ferreira, I.A.R. & Simoes, M.C.N., 2013. "Aid And Growth: A Comparative Study Between Sub-Saharan Africa And Asia," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(1), pages 113-132.
    10. Pierre E. Biscaye & Travis W. Reynolds & C. Leigh Anderson, 2017. "Relative Effectiveness of Bilateral and Multilateral Aid on Development Outcomes," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1425-1447, November.

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