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Foreign Aid Conditionality and Economic Growth

  • Shaomeng Jia
Chapter

Abstract

Why do we observe failure of foreign aid in promoting economic growth? This chapter disentangles this puzzle by reviewing the literature addressing the “aid-policies/institutions-growth” nexus. Multiple reasons attribute to the failure of foreign aid in the present literature. Limited data and imperfect methodology hamper this type of research. Statistically, the negative correlation between aid and growth makes it difficult to causally identify the effectiveness of aid on economic growth. Empirically, although good policy may boost economic growth, it seems irrelevant to foreign aid effectiveness. Institutions, however, may explain aid’s ineffectiveness at promoting economic growth.

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Shaomeng Jia
    • 1
  1. 1.Muskingum UniversityNew ConcordUSA

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