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Title:Aid and growth in fragile states PDF Logo
Authors:McGillivray, Mark
Feeny, Simon
Issue Date:2008
Series/Report no.:Research Paper, UNU-WIDER, United Nations University (UNU) 2008/03
Abstract:The literature on aid has come a long way in recent years, and as a result we now know much more about aid effectiveness than possibly ever before. But significant gaps in knowledge remain. One such gap is the effectiveness of aid in the so-called ‘fragile states’, countries with critically low policy and institutional performance ratings. The current paper addresses this void by examining possible links between aid and economic growth in fragile states. It finds that: (i) growth would have been 1.4 percentage points lower in highly fragile states in the absence of aid to them, compared to 2.5 percentage points in other countries; (ii) highly fragile states from a per capita income growth perspective can only efficiently absorb approximately one-third of the amounts of aid that other countries can, and; (iii) while from the same perspective most fragile states are under-aided, to the extent that they could efficiently absorb greater amounts of aid than they currently receive, many of the highly fragile states are substantially over-aided in this sense. The overall conclusion is that donors need to look very closely at their aid to the sub-set of fragile states deemed in this paper as highly fragile.
Subjects:foreign aid
economic growth
fragile states
policies
absorptive capacity
JEL:E60
F35
O11
O40
O43
ISBN:978-92-9230-043-2
Document Type:Working Paper
Appears in Collections:WIDER Research Papers, United Nations University (UNU)

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