Document Abstract
Published:
2001
Aid, shocks, and growth
What is the relationship between aid and growth?
This article analyses the relationship between aid and growth. The analysis finds that the better a country ' s policies, the more effective aid is in raising growth in that country. The article finds that:
- extreme negative shocks reduce growth
- the adverse effects of negative shocks on growth can be mitigated through offsetting increases in aid
- targeting aid to countries experiencing negative shocks appears to be even more important for aid effectiveness than targeting aid to countries with good policies.
- overall, donors have not used aid for this purpose
