In this paper, we explore the potential growth effects of foreign aid when in conjunction with severe debt problems. We first argue that aid, when used to finance debt repayments, does not lead to Dutch Disease while still alleviating an economic problem. A set of empirical estimates show that...

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...

This paper outlines how inflows of foreign aid might push up the real price of investments and thus crowd out private investments. The main implication - that aid leads to increasing real investment prices - finds substantial support in panel estimates from 78 developing countries. The effects...

Hopes for development aid remain high among Western politicians and pundits, but the evidence is depressing. Foreign aid has on average probably no effect on long-run growth. To understand the failure of many development projects, we need a deeper consideration of the failure of top-down...

Foreign aid is given for many purposes and different intentions, yet most studies treat aid flows as a unitary concept. This paper uses factor analysis to separate aid flows into different types. The main types can be interpreted as aid for economic purposes, social purposes, and reconstruction;...