Chapter 20 Foreign Aid, History, and Growth

Abstract

Recent work focuses on long-run historical factors in promoting economic growth and raising income. Other work considers whether the inflow of foreign aid works better in countries having good policies or good institutions. A problem with the latter is the endogeneity of policies and institutions since these are mutable. This paper combines the two approaches and asks whether aid (representing an inflow of resources) is better at promoting economic growth in historically “advantaged” (as identified by the literature) as opposed to “disadvantaged” ones. It finds that history still does matter but understanding why is less clear.

Citation

Gilbert, S. and Sylwester, K. (2006), "Chapter 20 Foreign Aid, History, and Growth", Lahiri, S. (Ed.) Theory and Practice of Foreign Aid (Frontiers of Economics and Globalization, Vol. 1), Emerald Group Publishing Limited, Leeds, pp. 403-420. https://doi.org/10.1016/S1574-8715(06)01020-7