Development Aid and Economic Growth: A positive long-run relation Sanjay G. Reddy and Camelia Minoiu

This paper analyzes the growth impact of official development assistance to developing countries taking into account both its growth depressing as well as growth enhancing effects while allowing the effect of aid on economic growth to occur over long time lags. The results, which stand the test of robustness, indicate that developmental aid has a large and significant positive impact on long-run growth and stands clearly in contrast to the widely publicised current rightwing argument that aid is ineffective in promoting growth.

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