A Dynamic Analysis of Tied Aid

In this paper we examine the impact of tied aid on capital accumulation and welfare in the presence of a quota on imports. Using a simulation model we establish that tied aid can lower the relative domestic price of the manufactured good and therefore reduce the stock of capital. In the presence of a strong production externality from capital accumulation and high tying ratio, tied aid may immiserize the recipient country.

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Year of publication:	2007
Authors:	Hazari, Bharat R. ; Laffargue, Jean-Pierre ; Chao, Chi-Chur ; Yu, Eden S. H.
Institutions:	HAL
Subject:	Tied aid \| Quotas \| Capital \| Welfare

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Extent:	application/pdf
Series:	Post-Print.
Type of publication:	Book / Working Paper
Notes:	View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00270896 Published, Theory and Practice of Foreign Aid, Elsevier, Amsterdam (Ed.), 2007, 173-183
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010750921