Development Aid and Growth: An Association Converging to Zero

Abstract

ABSTRACT:This note deals with a paradox: A literature growing exponentially in spite of the fact that it keeps finding the same result. We draw upon the findings of 106 empirical studies, of which 32 appeared in the last 4 years, to examine whether development aid generates economic growth. The studies report aid effects that have been steadily falling over time. The newer studies find a steady continuation of the downward trend. Using meta-regression analysis, we show that total aid has never had an effect on economic growth. Theoretically, this result might be due to simultaneity bias, but the evidence does not support this notion. There is some evidence that some aid components do have a positive effect on growth. JEL:F35

The Case for Aid in Fiscally Constrained Times: Morals, Ethics and Economics

“…Broadly, the case against ODA might be broken down into six elements: first, ODA has consistently under‐achieved its objectives, and the record of aid effectiveness is not good. This argument is contentious but is significantly dependent upon empirical evidence, which is itself open to question (see the systematic review by Doucouliagos and Paldam, ). Booth () reminds us of the limited role, which external assistance can play in fostering or developing political economy processes within recipient countries.…”

Decentralization and Foreign Aid Effectiveness: Do Aid Modality and Federal Design Matter in Poverty Alleviation?

“…In this context, Doucouliagos and Paldam state that "researchers should focus their attention away from aggregate measures of aid to more disaggregate ones." [Doucouliagos and Paldam (2009b)…”