Aid, Growth, Policies and Fragility

McGillivray, M and Feeny, S 2015, 'Aid, Growth, Policies and Fragility' in B. Mak Arvin, Byron Lew (ed.) Handbook on the Economics of Foreign Aid, Edward Elgar Publishing, Cheltenham, United Kingdom, pp. 375-389.

Document type: Book Chapter
Collection: Book Chapters

Title Aid, Growth, Policies and Fragility
Author(s) McGillivray, M
Feeny, S
Year 2015
Title of book Handbook on the Economics of Foreign Aid
Publisher Edward Elgar Publishing
Place of publication Cheltenham, United Kingdom
Editor(s) B. Mak Arvin, Byron Lew
Start page 375
End page 389
Subjects Economic Development and Growth
Summary The impact of aid on per capita income growth has been a particularly controversial topic among researchers and policy-makers alike. Most studies agree that growth would be lower in the absence of aid. This is evident from comprehensive literature surveys of aid and growth studies, including Hansen and Tarp (2000), Morrissey (2001), McGillivray et al. (2006), Mekasha and Tarp (2011) and Clemens et al. (2012). There is no such agreement in this literature regarding what might be described as the contingencies on which the impact of aid on growth is partially dependent. Debate over this topic is intensive and a failure to reach agreement over it is arguably the principal failing of the aid-growth literature owing to the potential guidance such agreement could provide for the selection of interventions aimed at improving aid effectiveness. Debate on aid-growth contingencies commenced after publication of the pioneering econometric investigation of Burnside and Dollar (1997, 2000). Burnside and Dollar multiplicatively interacted aid with a measure of policy, and found that aid only had a positive impact on growth in developing countries with good fiscal, monetary, and trade policies. Subsequent studies have sought to test the robustness of the Burnside and Dollar result, test for the relevance of different contingencies, or both. No study has been able to replicate the Burnside and Dollar result, and as such there is widespread concern in the research community over its robustness.
Copyright notice © 2015 B. Mak Arvin and Byron Lew
DOI - identifier 10.4337/9781783474592.00032
ISBN 9781783474578
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