Aid and the Supply Side : Public Investment, Export Performance, and Dutch Disease in Low-Income Countries

Adam, Christopher S. ; Bevan, David L.

Oxford University Press on behalf of the World Bank

关键词: investment;    public investment;    export competitiveness;    Dutch Disease;    productivity;   

DOI  :  10.1093/wber/lhj011
RP-ID  :  77515

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Contemporary policy debates on themacroeconomics of aid often concentrate on short-run Dutchdisease effects, ignoring the possible supply-side impact ofaid financed public expenditure. In the simple model of aidand public expenditure presented here, public infrastructuregenerates an inter-temporal productivity spillover, whichmay exhibit a sector-specific bias. The model also providesfor a learning-by-doing externality, through which totalfactor productivity in the tradable sector is an increasingfunction of past export volumes. An extended computableversion of this model is used to simulate the effect of astep increase in net aid flows. The simulations show thatbeyond the short run, when conventional demand-side Dutchdisease effects are present, the relationship betweenenhanced aid flows and real exchange rates, output growth,and welfare is less straightforward than simple models ofaid suggest. Public infrastructure investment that generatesa productivity bias in favor of non-tradable productiondelivers the largest aggregate return to aid, but at thecost of deterioration in the income distribution. Incomegains accrue predominantly to skilled and unskilled urbanhouseholds, leaving the rural poor relatively worse off.Under plausible parameterizations of the model, the ruralpoor may also be worse off in absolute terms.