EconStor >
Verein für Socialpolitik >
Ausschuss für Entwicklungsländer, Verein für Socialpolitik >
Proceedings of the German Development Economics Conference, 2010 (Hannover) >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/39992
  
Title:Foreign aid and recipient countries' exports: How important are improved bilateral trade relations? PDF Logo
Authors:Nowak-Lehmann D., Felicitas
Martínez-Zarzoso, Inmaculada
Cardozo, Adriana
Klasen, Stephan
Issue Date:2010
Series/Report no.:Proceedings of the German Development Economics Conference, Hannover 2010 44
Abstract:This paper uses the gravity model of trade to investigate the link between foreign aid and exports in recipient countries and tests for the transmission channels between aid and exports/economic development in developing countries. Most of the theoretical work emphasizes the negative impact of aid on recipient countries' exports primarily due to exchange rate appreciation, disregarding the positive impact of aid linked to the income effect. The empirical findings, in contrast, indicate that the net impact of aid on recipient countries' exports is positive and that the average return for recipients' exports is about 1.50 US$ for every aid dollar spent. The paper also estimates the effect of different types of aid (bilateral aid [from one donor to one specific recipient, and bilateral aid from all the other donors to one specific recipient], as well as multilateral aid flowing to a specific recipient) and finds that at least two types of aid have a positive and significant effect on recipients' exports, thus ruling out a major crowding out effect. It is further found that aid is hardly export-enhancing in Africa.
Subjects:International Tade
Foreign Aid
Recipient Exports
Real Exchange Rate
JEL:F10
F35
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2010 (Hannover)

Files in This Item:
File Description SizeFormat
327_nowak-lehmann_d.pdf365.64 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/39992

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.