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Aid, Growth, and Development: Have We Come Full Circle?

The Director of UNU-WIDER, has together with co-authors Channing Arndt and Sam Jones, just published a new article in the Journal of Globalization and Development. It can be downloaded from the journal's website.

The article’s abstract reads as follows: ‘The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro- and meso-levels, recent literature doubts the ability of foreign aid to foster economic growth and development. This paper assesses the aid–growth literature and, taking inspiration from the programme evaluation literature, we re-examine key hypotheses. In our findings, aid has a positive and statistically significant causal effect on growth over the long run, with confidence intervals conforming to levels suggested by growth theory. Aid remains a key tool for enhancing the development prospects of poor countries.’