TY  - JOUR
AU  - Rajan,Raghuram G.
AU  - Subramanian,Arvind
TI  - Aid and Growth: What Does the Cross-Country Evidence Really Show?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11513
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11513
L1  - http://www.nber.org/papers/w11513.pdf
N1  - Author contact info:
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu

Arvind Subramanian
Peterson Institute for International Economics
1750 Massachusetts Ave, NW
Washington, DC  20036
E-Mail: asubramanian@piie.com
M2  - featured in NBER digest on 2005-08-01
AB  - We examine the effects of aid on growth--in cross-sectional and panel data--after correcting for the bias that aid typically goes to poorer countries, or to countries after poor performance. Even after thiscorrection, we find little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth. We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings, which relate to the past, do not imply that aid cannot be beneficial in the future. But they
do suggest that for aid to be effective in the future, the aid apparatus will have to be rethought. Our findings raise the question: what aspects of aid offset what ought to be the indisputable growth enhancing effects of resource transfers? Thus, our findings support efforts under way at national and international levels to understand and improve aid effectiveness.
ER  -