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WP/44 Aid Effectiveness: Opening the Black Box

Research and Communication on Foreign Aid
Controversy over the aggregate impact of foreign aid has focused on reduced form estimates of the aid-growth link. The causal chain, through which aid affects developmental outcomes including growth, has received much less attention. We address this gap by: (i) specifying a structural model of the main relationships; (ii) estimating the impact of aid on a range of final and intermediate outcomes; and (iii) quantifying a simplied representation of the full structural form, where aid impacts on growth through key intermediate outcomes. A coherent picture emerges: aid stimulates growth and reduces poverty through physical capital investment and improvements in health.
Publisher:
UNU-WIDER
Series:
WIDER Working Paper
Volume:
2011/44
Title:
WP/44 Aid Effectiveness: Opening the Black Box
Authors:
Channing Arndt, Sam Jones, and Finn Tarp
Publication date:
August 2011
ISBN 13 Web:
978-92-9230-411-9
Copyright holder:
© UNU-WIDER
Copyright year:
2011
Keywords:
growth; foreign aid; aid effectiveness; simultaneous equations
JEL:
C23, O1, O2, O4
Sponsor:
UNU-WIDER 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).
Format:
online
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