Aid, Policies, and Growth
American Economic Review · 2000 · Volume 90 · Issue 4
Abstract
This paper uses a new database on foreign aid to examine the relationships among foreign aid, economic policies, and growth per capita GDP. We find that aid has a positive impact on growth in developing countries with good fiscal, monetary, and trade policies but has little effect in the presence of poor policies. Good policies are ones that are themselves important for growth. The quality of policy has only a small impact on the allocation of aid. Our results suggest that aid would be more effective if it were more systematically conditioned on good policy.
Keywords
International Linkages to Development, Role of International Organizations, Foreign Aid, Fiscal and Monetary Policy in Development
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