Foreign aid, economic growth and efficiency development preface preface the swedish agency for development evaluation (sadev) is a government-funded institute that conducts and disseminates evaluations of international development cooperation sadev‘s overall objective is to increase the efficiency of swedish devel-opment cooperation.
Sachs argues that foreign aid constitutes an important instrument to reduce poverty and foster development, while easterly suggests that foreign aid fails to reach the poor the discussion is complicated by the task of determining “cause and effect” in the growth models. While opponents of foreign aid argue that aid crowds-out domestic saving and investment activities, weakens domestic efforts of raising own revenue, and undermines policy ownership of recipient countries, proponents suggest aid helps poor countries to accelerate their economic growth by providing skill and finance for investments in public goods that the international capital market will not supply or will supply at a high interest rate.
Keywords: foreign aid, bilateral aid, aid effectiveness, aid allocation, economic growth authors’ e-mail addresses: [email protected] [email protected] 1 imf institute and department of economics, barnard college, columbia university, respectively.
Estimating the causal effect of foreign aid on growth: current evidence attempts to estimate the causal effect of foreign aid on growth can be divided into four groups, all aiming to identify variables that affect growth only through aid (and use them as instruments for aid. Foreign aid and growth, page 1 the effect of foreign aid on economic growth in developing countries e m ekanayake bethune-cookman university dasha chatrna university of florida abstract this paper analyzes the effects of foreign aid on the economic growth of developing countries.