Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84674
Authors: 
Arndt, Channing
Jones, Sam
Tarp, Finn
Year of Publication: 
2009
Series/Report no.: 
WIDER Discussion Papers, World Institute for Development Economics (UNU-WIDER) 2009/05
Abstract: 
The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, recent literature has turned decidedly pessimistic with respect to the ability of foreign aid to foster economic growth. Policy implications, such as the complete cessation of aid to Africa, are being drawn on the basis of fragile evidence. This paper first assesses the aid-growth literature with a focus on recent contributions. The aid-growth literature is then framed, for the first time, in terms of the Rubin Causal Model, applied at the macroeconomic level. Our results show that aid has a positive and statistically significant causal effect on growth over the long run with point estimates at levels suggested by growth theory. We conclude that aid remains an important tool for enhancing the development prospects of poor nations.
Subjects: 
Foreign aid
growth
aid effectiveness
causal effects
JEL: 
O1
O4
F35
C21
ISBN: 
978-92-9230-224-5
Document Type: 
Working Paper

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