Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/126302
Authors: 
Dalgaard, Carl-Johan
Hansen, Henrik
Year of Publication: 
2015
Series/Report no.: 
WIDER Working Paper 2015/053
Abstract: 
We investigate the marginal productivity of investment across countries. The aim is to estimate the return on investments financed by foreign aid and by domestic resource mobilization, using aggregate data. Both returns are expected to vary across countries and time. Consequently we develop a correlated random coefficients model, to estimate the average aggregate return on 'aid investments' and 'domestic investments'. Across different estimators and two different sources for GDP and investment data our findings are remarkably robust; the average gross return on 'aid investments' is about 20 per cent. This is in accord with micro estimates of the economic rate of return.
Subjects: 
productivity
growth accounting
foreign aid
random coefficients
panel data
JEL: 
C23
F35
O47
ISBN: 
978-92-9230-942-8
Document Type: 
Working Paper

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