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Foreign aid and business bottlenecks : a study of aid effectiveness

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  • Ferro, Esteban
  • Wilson, John S.

Abstract

This paper proposes a new framework to analyze aid effectiveness. Using World Bank firm survey data and OECD aid flow data, the authors analyze whether aid targets areas that firms in developing countries have identified as obstacles for their growth and whether aid actually improves firms'perceptions of those areas. The analysis finds that aid does target the areas that firms have identified as obstacles; aid funding trade related projects is particularly effective in targeting the correct countries. For the most part, aid has a positive impact on improving firms'perceptions, particularly in the business environment. And for each target area, smaller aid disbursements tend to be more effective at improving firm perceptions than larger disbursements.

Suggested Citation

  • Ferro, Esteban & Wilson, John S., 2011. "Foreign aid and business bottlenecks : a study of aid effectiveness," Policy Research Working Paper Series 5546, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5546
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    References listed on IDEAS

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    1. Feltenstein, Andrew & Iwata, Shigeru, 2005. "Decentralization and macroeconomic performance in China: regional autonomy has its costs," Journal of Development Economics, Elsevier, vol. 76(2), pages 481-501, April.
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    Cited by:

    1. Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.
    2. Pedrosa-Garcia, Jose Antonio, 2017. "Trends and Features of Research on Foreign Aid: A Literature Review," MPRA Paper 82134, University Library of Munich, Germany.
    3. Pedrosa-Garcia, Jose Antonio, 2016. "Does Foreign Aid Reduce Poverty? Evidence from Niger," MPRA Paper 91753, University Library of Munich, Germany.

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