Aid, Shocks, and Growth

Collier, Paul ; Dehn, Jan

World Bank, Washington, DC

关键词: ADVERSE EFFECTS;    AID;    AID ALLOCATION;    AVERAGE CHANGE;    COMMODITY PRICES;   

DOI  :  10.1596/1813-9450-2688
RP-ID  :  WPS2688

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Analysis of the relationship between aidand growth by Burnside and Dollar found that the better acountry's policies, the more effective aid is inraising growth in that country. But this result has beencriticized for being sensitive to choice of sample and forneglecting shocks. The authors incorporate export priceshocks into the analysis of aid's effect on growth.They construct export price indices using the approachpioneered by Deaton and Miller. They locate shocks bydifferencing the indices, removing predictable elements fromthe stationary process, and normalizing the residuals.Extreme negative shocks are the bottom 2.5 percent tail ofthis distribution. Introducing these extreme shocks into theBurnside-Dollar regression, the authors find that they arehighly significant: unsurprisingly, extreme negative shocksreduce growth. Once these shocks are included, theBurnside-Dollar results become robust to choice of sample.Moreover, the adverse effects of negative shocks on growthcan be mitigated through offsetting increases in aid.Indeed, targeting aid to countries experiencing negativeshocks appears to be even more important for aideffectiveness than targeting aid to countries with goodpolicies. But the authors show that, overall, donors havenot used aid for this purpose.