Foreign financial aid, government policies and economic growth: Does the policy setting in developing countries matter?

Date

2005

Authors

Tashrifov, Mohammad-Yusuf

Journal Title

Journal ISSN

Volume Title

Publisher

Crawford School of Economics and Government, The Australian National University

Abstract

Does foreign aid contribute to economic growth? If so, is the impact of aid conditional on good policies? This is a controversial issue. While the World Bank (1998) contends that the aid is effective only if recipient governments have good policies, others refute this view and argue that aid enhances economic growth regardless of the type of policies. This paper proposes new measures of policy that are more directly controlled by recipient governments. Using data from the World Bank, five panels of four-years covering the period 1974-1993 for 56 aid-receiving developing countries examine whether any significant relationship exists between foreign aid, government policies and economic growth. It is revealed that foreign aid has a positive impact on real growth per capita and this effect is not contingent upon the type of economic policies adopted by the recipient countries. It is also revealed that the log of the initial level of income is statistically significant, thus indicating conditional convergence among the countries in the sample, which contradicts the general findings of previous studies.

Description

Keywords

Citation

Tashrifov, Y. (2005). Foreign financial aid, government policies and economic growth: Does the policy setting in developing countries matter?. International and Development Economics Paper 05-10. Canberra, ACT: Crawford School of Economics and Government, The Australian National University.

Source

Type

Working/Technical Paper

Book Title

Entity type

Access Statement

Open Access

License Rights

DOI

Restricted until

Downloads

Back to topicon-arrow-up-solid
 
APRU
IARU
 
edX
Group of Eight Member

Acknowledgement of Country

The Australian National University acknowledges, celebrates and pays our respects to the Ngunnawal and Ngambri people of the Canberra region and to all First Nations Australians on whose traditional lands we meet and work, and whose cultures are among the oldest continuing cultures in human history.


Contact ANUCopyrightDisclaimerPrivacyFreedom of Information

+61 2 6125 5111 The Australian National University, Canberra

TEQSA Provider ID: PRV12002 (Australian University) CRICOS Provider Code: 00120C ABN: 52 234 063 906