Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80922
Authors: 
Collier, Paul
Year of Publication: 
2013
Series/Report no.: 
WIDER Working Paper 2013/004
Abstract: 
I discuss how aid can support growth in small, isolated economies. Small markets frustrate scale economies and competition. Combined with high transport costs, essential inputs become prohibitively expensive. Breaking the coordination problem requires pioneering investment. Since this generates externalities it will be undersupplied. Donors have both the finance and the long-term relationships that could offset the externalities and political risks that impede pioneers. However, there are practical difficulties of how such support is best organized. In order of ambition these run from finance of infrastructure, through subsidized capital and political risk insurance, to long-term partnerships with private firms.
Subjects: 
aid
growth
investment
JEL: 
E2
F35
O11
ISBN: 
978-92-9230-581-9
Document Type: 
Working Paper

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