We explore the potential growth effects of foreign aid when in conjunction with severe debt problems. When used to finance debt repayments, aid may not lead to Dutch Disease while it still alleviates an economic problem. A set of empirical estimates shows that although inflows of foreign aid in...

The principal focus in the substantial literature on impediments to economic development has been on the inadequacies of policies and governance. However, successful economic development requires effectiveness of markets and incentives for investment, which in turn require trust. This paper...

Most studies treat aid flows as a unitary concept with a standard result that aid does not affect long-run economic growth or development. This chapter argues that the standard finding may be misleading if different types of aid have different effects. To alleviate this problem, I use factor...