Are There Negative Returns to Aid? A Comment
12 Pages Posted: 9 Feb 2006
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: Suggested Citation