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WP/96 Aid, Growth, and Development: Have We Come Full Circle?

The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, recent literature doubts the ability of foreign aid to foster economic growth and development. This paper assesses the aid-growth literature and, taking inspiration from the program evaluation literature, we re-examine key hypotheses. In our findings, aid has a positive and statistically significant causal effect on growth over the long run, with confidence intervals conforming to levels suggested by growth theory. Aid remains a key tool for enhancing the development prospects of poor countries.
Publisher:
UNU-WIDER
Series:
WIDER Working Paper
Volume:
2010/96
Title:
WP/96 Aid, Growth, and Development: Have We Come Full Circle?
Authors:
Channing Arndt, Sam Jones, and Finn Tarp
Publication date:
September 2010
ISBN 13 Web:
978-92-9230-334-1
Copyright holder:
© UNU-WIDER
Copyright year:
2010
Keywords:
foreign aid, growth, aid effectiveness, causal effects.
JEL:
O1, O4, F35, C21
Sponsor:
UNU-WIDER gratefully acknowledges the financial contributions to the research programme by the governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development—DFID).
Format:
online and printed copies
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