Work

Does foreign aid increase private investment? Evidence from panel cointegration

Year: 2011

Type: article

Abstract: This article uses panel cointegration and causality techniques to examine the long run relationship between foreign aid and private investment. Our main result is that aid has a statistically significant negative effect on private investment. This result is robust to outliers, different measures and forms of aid, sample selection and the sample period. In addition, we find that long run causality runs in both directions, suggesting that an increase in aid reduces private investment and that, in turn, higher private investment leads to lower aid inflows.

Source: Applied Economics

DOI: 10.1080/00036846.2011.566183

Authors: Dierk Herzer, Michael Grimm

Institutions: Goethe University Frankfurt, International Institute of Social Studies, Erasmus University Rotterdam

Language: English

Topic: International Development and Aid

Subfield: Development

Field: Social Sciences

Domain: Social Sciences

SDGs: Partnerships for the goals, Decent work and economic growth

Open Access status: green

OpenAlex ID: W2122969936

FWCI: 11.94

Cites: 68

Cited by: 52

Related to: 10