The return to foreign aid
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The return to foreign aid. / Dalgaard, Carl-Johan Lars; Hansen, Henrik.
Helsinki, Finland : UNU-WIDER, 2015.Research output: Working paper › Research
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TY - UNPB
T1 - The return to foreign aid
AU - Dalgaard, Carl-Johan Lars
AU - Hansen, Henrik
N1 - JEL Classification: C23, F35, O47
PY - 2015/6
Y1 - 2015/6
N2 - We investigate the marginal productivity of investment across countries. The aim is to estimate the return on investments financed by foreign aid and by domestic resource mobilization, using aggregate data. Both returns are expected to vary across countries and time. Consequently we develop a correlated random coefficients model, to estimate the average aggregate return on ‘aid investments’ and ‘domestic investments’. Across different estimators and two different sources for GDP and investment data our findings are remarkably robust; the average gross return on ‘aid investments’ is about 20 per cent. This is in accord with micro estimates of the economic rate of return.
AB - We investigate the marginal productivity of investment across countries. The aim is to estimate the return on investments financed by foreign aid and by domestic resource mobilization, using aggregate data. Both returns are expected to vary across countries and time. Consequently we develop a correlated random coefficients model, to estimate the average aggregate return on ‘aid investments’ and ‘domestic investments’. Across different estimators and two different sources for GDP and investment data our findings are remarkably robust; the average gross return on ‘aid investments’ is about 20 per cent. This is in accord with micro estimates of the economic rate of return.
KW - Faculty of Social Sciences
KW - Productivity
KW - growth accounting
KW - foreign aid
KW - random coefficients
KW - panel data
KW - Productivity
KW - growth accounting
KW - foreign aid
KW - random coefficients
KW - panel data
M3 - Working paper
T3 - UNU WIDER Working Paper Series
BT - The return to foreign aid
PB - UNU-WIDER
CY - Helsinki, Finland
ER -
ID: 138812861