1887

UN Department of Economic and Social Affairs (DESA) Working Papers

The UN Department of Economic and Social Affairs (DESA) Working Papers aim to stimulate discussion and critical comment on the broad range of economic, social and environmental issues associated with the United Nations Development Agenda.

English

Development Aid and Economic Growth

A Positive Long-Run Relation

We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two components of aid: a developmental, growth-enhancing component, and a geopolitical, possibly growth-depressing component. Second, our specifications allow for the effect of aid on economic growth to occur over long time-lags. Our results indicate that developmental aid promotes long-run growth. Th e effect is large and robustly significant, and withstands an array of robustness checks including alternative specifications, choices of the proxy for development aid, and treatments of outliers.

English

Keywords: official development assistance, economic growth
JEL: O1: Economic Development, Innovation, Technological Change, and Growth / Economic Development; O4: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity; O2: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy
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