Chapter 4 Does Foreign Aid Impede Foreign Investment?

Abstract

This paper investigates the impact of foreign aid on foreign investment when foreign aid is used to finance a public consumption good. By formulating and analyzing a three-good general equilibrium model, we show that such foreign aid could crowd out foreign investment, given a factor intensity condition.

Citation

Beladi, H. and Oladi, R. (2006), "Chapter 4 Does Foreign Aid Impede Foreign Investment?", Lahiri, S. (Ed.) Theory and Practice of Foreign Aid (Frontiers of Economics and Globalization, Vol. 1), Emerald Group Publishing Limited, Leeds, pp. 55-63. https://doi.org/10.1016/S1574-8715(06)01004-9