Are There Negative Returns to Aid? A Comment

12 Pages Posted: 9 Feb 2006

See all articles by Mwanza Nkusu

Mwanza Nkusu

International Monetary Fund (IMF)

Date Written: November 2004


Amid controversies surrounding aid effectiveness, an increasing number of empirical studies find support for the idea that aid can spur growth and that the aid-growth relationship is nonlinear. Lensink and White propose a model to illustrate the possible existence of what has been labeled an "aid Laffer curve." This short paper highlights the model`s weaknesses and suggests that the model does not fulfill the purpose of illustrating the possible existence of negative returns to aid.

Keywords: Foreign aid, economic growth, poverty

JEL Classification: F35, I30, O40

Suggested Citation

Nkusu, Mwanza, Are There Negative Returns to Aid? A Comment (November 2004). IMF Working Paper No. 04/212, Available at SSRN:

Mwanza Nkusu (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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