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The Effect of Aid on Growth : Evidence from a Quasi-Experiment

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dc.contributor.authorGaliani, Sebastian
dc.contributor.authorKnack, Stephen
dc.contributor.authorXu, Lixin Colin
dc.contributor.authorZou, Ben
dc.date.accessioned2014-05-14T22:27:10Z
dc.date.available2014-05-14T22:27:10Z
dc.date.issued2014-05
dc.description.abstractThe literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. This paper exploits an instrumental variable based on the fact that since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59 percent on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A one percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points. The analysis shows that the main channel through which aid promotes growth is by increasing physical investment.en
dc.identifierhttp://documents.worldbank.org/curated/en/2014/05/19495112/effect-aid-growth-evidence-quasi-experiment
dc.identifier.doi10.1596/1813-9450-6865
dc.identifier.urihttps://hdl.handle.net/10986/18338
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 6865
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectABSOLUTE VALUE
dc.subjectAFRICAN DEVELOPMENT BANK
dc.subjectAGGREGATE LEVEL
dc.subjectAID
dc.subjectAID ALLOCATION
dc.subjectAID FLOWS
dc.subjectANNUAL GROWTH
dc.subjectANNUAL RATE
dc.subjectAVERAGE ANNUAL
dc.subjectAVERAGE GROWTH
dc.subjectAVERAGE GROWTH RATE
dc.subjectAVERAGE LEVEL
dc.subjectAVERAGE SHARE
dc.subjectBANKING CRISIS
dc.subjectBENCHMARK
dc.subjectBILATERAL AID
dc.subjectBILATERAL DONORS
dc.subjectCIVIL LIBERTIES
dc.subjectCONDITIONAL CONVERGENCE
dc.subjectCOUNTRY CHARACTERISTICS
dc.subjectCOUNTRY DUMMY
dc.subjectCOUNTRY LEVEL
dc.subjectCOUNTRY NAME
dc.subjectCOUNTRY SPECIFIC
dc.subjectCOUNTRY-SPECIFIC EFFECTS
dc.subjectCROSS COUNTRY
dc.subjectCROSS-SECTIONAL DATA
dc.subjectDATA MODEL
dc.subjectDEBT
dc.subjectDENSITY FUNCTION
dc.subjectDEPENDENT VARIABLE
dc.subjectDEVELOPED COUNTRIES
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT AID
dc.subjectDEVELOPMENT ASSISTANCE
dc.subjectDEVELOPMENT COOPERATION
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDEVELOPMENT INDICATORS
dc.subjectDEVELOPMENT ISSUES
dc.subjectDEVELOPMENT POLICY
dc.subjectDEVELOPMENT RESEARCH
dc.subjectDYNAMIC PANEL
dc.subjectDYNAMIC PANEL MODELS
dc.subjectECONOMETRIC MODELS
dc.subjectECONOMETRICS
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC REVIEW
dc.subjectECONOMIC STUDIES
dc.subjectECONOMICS
dc.subjectEMPIRICAL GROWTH MODEL
dc.subjectEMPIRICAL LITERATURE
dc.subjectEMPIRICAL MODEL
dc.subjectEMPIRICAL RESEARCH
dc.subjectEMPLOYMENT EQUATIONS
dc.subjectENDOGENOUS VARIABLE
dc.subjectENDOGENOUS VARIABLES
dc.subjectERROR TERM
dc.subjectERROR TERMS
dc.subjectESTIMATED COEFFICIENT
dc.subjectESTIMATED COEFFICIENTS
dc.subjectEXCHANGE RATES
dc.subjectEXOGENOUS CHANGES
dc.subjectEXPLANATORY VARIABLE
dc.subjectFIXED EFFECTS
dc.subjectFIXED EFFECTS ESTIMATOR
dc.subjectFOOD AID
dc.subjectFOREIGN AID
dc.subjectFUNCTIONAL FORM
dc.subjectGDP
dc.subjectGDP DEFLATOR
dc.subjectGDP PER CAPITA
dc.subjectGROSS DOMESTIC PRODUCT
dc.subjectGROWTH DETERMINANTS
dc.subjectGROWTH EQUATION
dc.subjectGROWTH LITERATURE
dc.subjectGROWTH MODELS
dc.subjectGROWTH RATE
dc.subjectGROWTH RATES
dc.subjectGROWTH REGRESSIONS
dc.subjectHISTORICAL DATA
dc.subjectHUMAN DEVELOPMENT
dc.subjectHUMANITARIAN AID
dc.subjectIDA ELIGIBILITY
dc.subjectINCOME DATA
dc.subjectINCOME DISTRIBUTION
dc.subjectINCOME LEVEL
dc.subjectINCOME LEVELS
dc.subjectINCOMES
dc.subjectINFLATION
dc.subjectINFLATION RATES
dc.subjectINTERNATIONAL DEVELOPMENT
dc.subjectINVENTORY
dc.subjectINVESTMENT RATE
dc.subjectLAGGED DEPENDENT
dc.subjectLAGGED VALUE
dc.subjectLAGGED VALUES
dc.subjectLESS DEVELOPED COUNTRIES
dc.subjectLONG RUN
dc.subjectLOW-INCOME COUNTRIES
dc.subjectMACROECONOMICS
dc.subjectMARGINAL EFFECT
dc.subjectMEASUREMENT ERROR
dc.subjectMEASUREMENT ERRORS
dc.subjectMONEY SUPPLY
dc.subjectNATIONAL ACCOUNTS
dc.subjectNATIONAL INCOME
dc.subjectNEGATIVE GROWTH
dc.subject0 HYPOTHESIS
dc.subjectOFFICIAL DEVELOPMENT ASSISTANCE
dc.subjectPER CAPITA GROWTH
dc.subjectPER CAPITA GROWTH RATE
dc.subjectPER CAPITA INCOME
dc.subjectPOINT ESTIMATE
dc.subjectPOINT ESTIMATES
dc.subjectPOLICY DISCUSSIONS
dc.subjectPOLICY RESEARCH
dc.subjectPOLITICAL RIGHTS
dc.subjectPOOR COUNTRIES
dc.subjectPOSITIVE EFFECT
dc.subjectPOSITIVE EFFECTS
dc.subjectPOSITIVE IMPACT
dc.subjectPOSITIVE SHOCKS
dc.subjectPOWER PARITY
dc.subjectPRIMARY SCHOOL ENROLMENT
dc.subjectPRIVATE SECTOR
dc.subjectPURCHASING POWER
dc.subjectREAL GDP
dc.subjectREGRESSION SAMPLE
dc.subjectSENSITIVITY ANALYSIS
dc.subjectSERIAL CORRELATION
dc.subjectSIGNIFICANT DIFFERENCES
dc.subjectSIGNIFICANT EFFECT
dc.subjectSIGNIFICANT EVIDENCE
dc.subjectSTANDARD DEVIATION
dc.subjectSTRUCTURAL ADJUSTMENT
dc.subjectSTRUCTURAL CHANGE
dc.subjectWEALTH
dc.subjectWORLD DEVELOPMENT INDICATORS
dc.titleThe Effect of Aid on Growth : Evidence from a Quasi-Experimenten
dspace.entity.typePublication
okr.crossref.titleThe Effect of Aid on Growth: Evidence from a Quasi-Experiment
okr.date.disclosure2014-05-01
okr.date.doiregistration2025-04-10T09:51:36.057163Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2014/05/19495112/effect-aid-growth-evidence-quasi-experiment
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticePoverty
okr.guid730581468159302660
okr.identifier.doi10.1596/1813-9450-6865
okr.identifier.externaldocumentum000158349_20140513161349
okr.identifier.internaldocumentum19495112
okr.identifier.reportWPS6865
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/05/13/000158349_20140513161349/Rendered/PDF/WPS6865.pdfen
okr.sectorHealth and other social services :: Other social services
okr.themeSocial protection and risk management :: Poverty strategy, analysis and monitoring
okr.topicCountry Strategy and Performance
okr.topicPoverty Reduction::Achieving Shared Growth
okr.topicPoverty Reduction::Inequality
okr.topicEconomic Theory and Research
okr.topicDevelopment Economics and Aid Effectiveness
okr.topicMacroeconomics and Economic Growth
okr.unitHuman Development and Public Services Team and Finance and Private Sector Development Team, Development Research Group
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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