Like I said, caveat lector on all aid growth regressions, but this one’s kind of interesting:
Development aid and economic growth: A positive long-run relation
Camelia Minoiua and Sanjay G. Reddy
We analyze the growth impact of official development assistance to developing countries. Our approach is different from that of previous studies in two major ways. First, we disentangle the effects of two kinds of aid: developmental and non-developmental. Second, our specifications allow for the effect of aid on economic growth to occur over long periods. Our results indicate that developmental aid promotes long-run growth. The effect is significant, large and robust to different specifications and estimation techniques.
Interesting simply for the two ideas that it bases its analysis on:
- That the impact of aid on growth may be most clearly realised over long time-frames (once those healthy better educated kids have entered the workforce, for example).
- That different donors have different effects. In particular, those that give aid for developmental as opposed to geopolitical reasons are much more likely to give aid which works.
Point one is just an interesting point. Point two, I think, is essential to regonise explicitly whenever we talk about whether aid works or how we should give it better. Even if you’re sceptical about the regression evidence, there is so much evidence from the cold war of rent-a-dictator type aid going badly that the point is beyond debate.
And it’s worth acknowledging – before you start talking about Searchers or Planners, or the need to tailor aid programmes carefully to context (one of my main beliefs) – that aid needs to be given with good intentions. If it’s not (and too much of it hasn’t in the past) it’s highly unlikely to work.
The old saying is that ‘the road to hell is paved with good intentions’. Maybe, but almost always it was designed, engineered and hewn long before with abundant ill intent. Remember that – if you want aid to work, at the very least you’ve got to give it with the intent of helping people.