We argue that donors could improve the effectiveness of foreign aid by pursuing complementary and coherent non-aid policies. In particular, we hypothesize that aid from donors that are open to immigration has stronger growth effects than aid from closed donors. We estimate the aid-growth nexus in first differences to mitigate endogeneity concerns. Our empirical results support the hypothesis that donors' openness to immigration strengthens the growth effects of foreign aid.
aid effectiveness migration remittances economic growth