Geopolitics and the effect of foreign aid on economic growth: 1970-2001

Headey, Derek (2008) Geopolitics and the effect of foreign aid on economic growth: 1970-2001. Journal of International Development, 20 2: 161-180. doi:10.1002/jid.1395

Author Headey, Derek
Title Geopolitics and the effect of foreign aid on economic growth: 1970-2001
Journal name Journal of International Development   Check publisher's open access policy
ISSN 0954-1748
Publication date 2008-03
Sub-type Article (original research)
DOI 10.1002/jid.1395
Open Access Status
Volume 20
Issue 2
Start page 161
End page 180
Total pages 20
Place of publication Chichester, West Sussex, United Kingdom
Publisher John Wiley & Sons
Language eng
Abstract Previous aid effectiveness research often claims that foreign aid has been unsuccessful in increasing growth rates. This result could be due either to methodological weaknesses, or to genuine aid efficiency losses. Empirically, the author finds that once the best available techniques are employed, aid has a significant but moderate average effect on growth over the period 1970-2001. A promising explanation of why the estimated returns to aid are not larger is that bilateral aid had no significant effect on growth during the Cold War (pre-1990), but had a significant and sizeable effect thereafter. In contrast, multilateral aid seems to have had sizeable and significant effects throughout. These results imply that the negative conclusions drawn by earlier research should be interpreted in their proper historical context, rather than as a necessary condemnation of current aid effectiveness.
Keyword Foreign aid
Multilateral aid
Bilateral aid
Economic growth
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
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