Cite this item:
Fielding, D., & Knowles, S. (2007). Measuring aid effectively in tests of aid effectiveness (Economics Discussion Papers Series No. 704). University of Otago. Retrieved from http://hdl.handle.net/10523/913
Abstract:
In the extensive empirical literature on aid effectiveness, aid is always measured as a share of GDP. However, measuring aid in real dollars per capita is also consistent with standard growth theory. We show that the choice of denominator makes an enormous difference to the sign and significance of coefficients on aid variables in crosscountry panel growth regressions. Our aim is to redirect attention towards the theoretical foundations of the growth literature.
