Figure 3 - available via license: Creative Commons Attribution 4.0 International
Content may be subject to copyright.
Source publication
As research on the empirical link between aid and growth continues to grow, it is time to revisit the accumulated evidence on aid effectiveness. This paper extends previous meta-analyses, noting that the availability of more data enables us to conduct a sub-group analysis by disaggregating the sample into different time horizons and assess if there...
Context in source publication
Context 1
... bias is likely to exist if the areas where studies are missing are areas of low statistical significance. As shown in the contour enhanced funnel plot depicted in Figure 3, this is not the case for the aid effectiveness literature studied here. Overall, the distribution of the estimates is reasonable in the regions of both low and high statistical significance, and there is no evidence that studies with insignificant results have been repressed. ...
Similar publications
Antibiotics are widely used as growth promoters (AGPs) in livestock production to improve animal performance and health. However, pig producers today face the prohibition of in-feed antimicrobials and have to find safe and effective alternatives. Lactobacillus species are active microorganisms that convey multiple beneficial effects to the host and...
This paper provides a meta-analytic update on the relationship between intelligence and divergent thinking (DT), as research on this topic has increased, and methods have diversified since Kim’s meta-analysis in 2005. A three-level meta-analysis was used to analyze 875 correlation coefficients from 112 studies with an overall N = 33,897. The overal...
The meta-plot is a descriptive visual tool for meta-analysis that provides information on the primary studies in the meta-analysis and the results of the meta-analysis. More precisely, the meta-plot portrays (1) the precision and statistical power of the primary studies in the meta-analysis, (2) the estimate and confidence interval of a random-effe...
Citations
... Most of such research findings have concluded with issues from 'aid works' to 'aid does not work'. Yet in most scholarly instances, 'aid works but only under certain conditions' (Cassimon et al., 2023;Mekasha & Tarp, 2019). Affirming this, the works of Burnside and Dollar famously concluded with an in-depth analysis that: ''foreign aid spurs growth in developing economies that practice sound policies, and this further reduces the country's poverty index'' (Burnside & Dollar, 1997). ...
The symbolism of donor aid has brought humanitarian relief to communities in despair in Northern Ghana, as NGO projects continue to target beneficiaries. Challenges with project implementation processes have, however, reduced their effectiveness and impact. Deploying an ‘adaptive grounded theory’, coupled with questionnaires and interviews, this paper relied heavily on the iterative process of systematic literature review. It investigated the problem of project fragmentation and the imagery of development aids within the five northern regions of Ghana. Focusing on donor projects within the beneficiary communities, the study found joint causation for donor weakness in relation to the imagery of development efforts and beneficiary stress as consequences of the thwarted attempts at poverty intervention. The prognosis is the phenomenon of poverty dance of beneficiaries. Consequently, we conclude that for the effectiveness of substantial aid investments, there is the need to move policy dialogue of development interventions from ‘community needs assessments’ to targeted-infrastructure needs assessment.
... It is important to note that we do not discuss here any potential solution for the CAR, including the potential role of official development aid, structural reforms and financing programs (Balima and Sokolova 2021;Doucouliagos and Paldam 2013;Mandon and Woldemichael 2023;Mekasha and Tarp 2019;Moyo 2010;World Bank 2022). The remainder of the paper is structured as follows: The first section presents the methodology used to estimate the economic impacts of the civil war in CAR as well as our identification strategy. ...
This study utilizes the synthetic control method to assess the economic consequences of the ongoing civil war in the Central African Republic since December 2012. Drawing on a donor pool of low-income and lower-middle-income countries, it constructs a synthetic counterfactual to depict the economic trajectory in the absence of conflict. The analysis reveals a significant decline in national gross domestic product (GDP) per capita, estimated between 45.3 percent and 47.8 percent over a decade of conflict, resulting in a cumulative GDP loss of US32.4 billion (purchasing power parity, PPP, adjusted). Two model specifications are employed, one using pre-treatment outcomes and the other integrating external covariates. Robustness checks support the findings, indicating a minimum 10-year decline of 35.3 percent in GDP per capita. Even considering the 2003 coup, this civil war has the most detrimental economic impact. The analysis remains robust when incorporating GDP data from remote sensing sources. These effects align with the fragility trap concept, portraying one of the highest economic impacts of civil conflict in terms of relative GDP per capita decline.
... Further, most studies examined the direct impact and ignored the channel effect. A survey by Meksha and Tarp (2019) suggests that the direct impact of aid is limited, but the indirect impact is significant, subject to the availability of favorable country-specific factors. Therefore, this study fills this gap and extends the conditional literature by examining the role of conditioning factors in the interplay between aid and investment covering South Asia. ...
This study contributes to the aid-development literature by examining the role of host country factors in conditioning the investment effect of foreign aid, covering a panel of six South Asian countries over the period 1990–2019. The study uses second-generation panel unit root, cointegration, and causality methods to control for endogeneity, cross-section dependency, and structural breaks. The study further applies the panel autoregressive distributed lag (ARDL) method of Pooled Mean Group (PMG) and the Common Correlated Effect Pooled Mean Group (CCEPMG) to estimate the long and short-run effects. The study results suggest that in the long run, foreign aid reduces or crowds out domestic investment directly but promotes domestic investment from the complementarity between aid and trade, human and financial development, and FDI. The causality result provides evidence of bi-directional causality between the two, supporting the crowding-out effect.
... It is important to note that we do not discuss here any potential solution for the CAR, including the potential role of official development aid, structural reforms and financing programs (1,(30)(31)(32)(33)(34). The remainder of the paper is structured as follows: The first section presents the methodology used to estimate the socio-economic impacts of the 2013 civil war in CAR as well as our identification strategy. ...
This paper uses the synthetic control method to assess the impact of the civil war in the Central African Republic on the main socioeconomic indicators. Based on a donor pool of low-income countries, the paper builds a synthetic counterfactual to evaluate the magnitude of the socioeconomic impacts of the civil war. The results indicate that the civil war led to a significant drop in gross domestic product per capita (41.6 percent), nighttime light intensity (33.8 percent), industrial production (34.1 percent), manufacturing value added (33.7 percent), and the human asset index (20.2 percent), from 2013, which is considered as the starting point of the ongoing political and civil crisis.
... It is important to note that we do not discuss here any potential solution for the CAR, including the potential role of official development aid, structural reforms and financing programs (1,(30)(31)(32)(33)(34). The remainder of the paper is structured as follows: The first section presents the methodology used to estimate the socio-economic impacts of the 2013 civil war in CAR as well as our identification strategy. ...
This paper uses the synthetic control method to assess the impact of the civil war in the Central African Republic on the main socioeconomic indicators. Based on a donor pool of low-income countries, the paper builds a synthetic counterfactual to evaluate the magnitude of the socioeconomic impacts of the civil war. The results indicate that the civil war led to a significant drop in gross domestic product per capita (41.6 percent), nighttime light intensity (33.8 percent), industrial production (34.1 percent), manufacturing value added (33.7 percent), and the human asset index (20.2 percent), from 2013, which is considered as the starting point of the ongoing political and civil crisis.
... Overall, it seems that the ability of development cooperation to address these "root causes" has been limited. To start with economic growth, the impact of foreign aid is disputed (Doucouliagos & Paldam, 2011;Mekasha & Tarp, 2019). While foreign aid can improve health, education, water supply etc., which are crucial conditions for long-term economic growth (Myrdal, 1968), it is rarely the sole cause of significant short-term growth rates (Bird & Choi, 2020). ...
Motivation
In European policy debate, conflict, economic crisis, lack of development, population growth, and climate change are often seen as the root causes of migration from Africa. To deter irregular migration to Europe, aid has thus been directed towards these perceived causes. This seems, however, not to deter irregular migration.
Purpose
We explore the discrepancy between the official discourse of root causes and insights from research on migration decisions; and how discourse and evidence relate to aid. We ask what kind of policy change is needed if aid is possibly to influence irregular migration. We focus on the motivations and drivers of migration and how development cooperation may influence these.
Methods and approach
Considering African migration to Europe, we examine the official European discourse on root causes of irregular migration, highlight recent developments in the academic understanding of migration aspirations and drivers, and investigate various attempts to analyse the impact of foreign aid on assumed “root causes” and migration.
Findings
Migration is influenced by drivers that differ by the specific context in which potential migrants decide to migrate or not. Aid to influence migration must be thoroughly adapted to the circumstances of potential migrants. Addressing so‐called root causes may be irrelevant to many potential migrants and will require long‐term change to have any impact. It may even increase migration in the short term. Foreign aid that adopts a blueprint regardless of context is unlikely to deter irregular migration in the short or medium term.
Policy implications
If irregular African migration to Europe is to be deterred through development cooperation, European policymakers and development practitioners need to elaborate and differentiate between aid‐supported activities through careful understanding of the migration dynamics specific to individual localities and societies.
... Foreign aid has a different impact on the economy of each country, as countries vary from each other in a number of ways. In middle-income countries, aid has been utilized to build social and economic infrastructure; resultantly, employment opportunities and economic growth have been accelerated in the long run (Azam and Feng 2022) Many developing countries used aid for the promotion of local industries and domestic investments and to finance development (Yiew and Lau 2018;Nadeem et al. 2020;Mekasha and Tarp 2019). ...
The effectiveness of foreign aid is a highly debated issue in the economic literature. It was argued that foreign aid makes countries dependent on it and is ineffective, and the negative impacts of aid outweigh its positive role. A contrasting argument is that foreign aid has helped different economies in their economic development. Taiwan, Israel, and South Korea are some examples of success stories that signify that aid is a crucial and essential ingredient in the process of economic development. Given the importance of aid effectiveness, the present study has attempted to calculate the rate of returns to foreign aid in Pakistan by using data for the period 1960–2020 and using the generalized method of moments (GMM) technique. The study calculated that foreign aid plays a positive role in the economic development of Pakistan and the rate of return on foreign aid is 10–14% in different specifications. It is suggested that before accepting any new loan, its rate of return must be calculated. Development activities such as conducting feasibility studies and other pre-investment analyses should be financed either from foreign grants or from internal sources.
... Their "Post-Cold War (1990-2013) analysis…[revealed] that aid can decrease growth at any level of policy" (ibid, p. 577). On the contrary, Mekasha and Tarp (2019) reported positive evidence that aid would impact growth. Hansen and Tarp (2000) went further, showing that aid could increase the growth rate and that it would not be conditional on a 'good' policy. ...
The Millennium Challenge Corporation (MCC) is a United States’ agency, with a novel structure that provides international development assistance. It operates with the stated objective of assisting the grant-recipient countries in their attempts to accelerate economic growth through poverty reduction, particularly by identifying and removing the binding constraints to growth. There is much debate over how the MCC programme is effective in realising its growth-supporting objective. A few studies have been conducted to examine this aspect. The present study, another attempt to shed light on the comparative growth performance in the MCC grant recipient economies, did not enable the inference that the MCC grant has successfully accelerated the growth impetus in recipient nations. This suggestive inference, however, has to be reconfirmed through future research, that could possibly include any other variables which might be considered as influential, and also capture the long-term growth effects which may not have been reflected through macroeconomic data thus far.
... The debate in the aid-growth literature documents five generations of previous studies . While one group of studies show optimistic results (Sethi et al., 2019;Mekasha and Tarp, 2019;Civelli et al., 2018;Juselius et al., 2017;Galiani et al., 2017;Arndt et al., 2015;Mekasha and Tarp, 2013;Booth, 2011), the other group refers to several problems related to foreign aid, like the micro-macro paradox and the Dutch-disease effects (Asongu and Nwachukwu, 2016;Subramanian, 2008, 2011;Mosley, 1986). Dalgaard and Hansen (2015) estimated the average rate of return on aid-financed projects and investments using a correlated random coefficients model for estimating average returns. ...
The study analyses the effectiveness of aggregate as well as sectoral foreign aid on growth and structural transformation for 32 sub-Saharan African (SSA) countries over the period from 2002 to 2019. For this purpose, a structural transformation index (STI) has been constructed using the value-added and employment shares of the economy. There is a lack of studies in the aid effectiveness literature that examine the effects of sectoral aid on overall growth and development of the economy. Comparing the effectiveness of different types of aid on growth and structural transformation is a novel approach. In this analysis, we also take into account the roles of institutional quality and human capital on aid effectiveness. To this end, we have used Driscoll–Kraay Fixed-Effect estimators, Fixed-Effects Panel Threshold regression and Method of Moments Quantile regression to analyse the effectiveness of aggregate and sectoral foreign aid. Our estimation techniques are robust to cross-sectional dependence and slope heterogeneity. We find that both agricultural and social-sector aid have positive significant effects on growth but negative significant effect on structural transformation. This suggests that foreign aid should be increased in these sectors, conditioned by the level of institutional quality. Human capital is found to increase the effectiveness of foreign aid. Aid to economic infrastructure is the only type of aid which is found to increase structural transformation significantly. This study helps in designing aid allocation strategies, so as to promote both growth and structural transformation in the SSA countries.
... Others have argued that donors have contributed to the proliferation of market-oriented reforms which are favorable to growth (Heckelman and Knack 2009). A recent meta-analysis of aid effectiveness posits that assessments of the effects of aid on growth are ambiguous pre-2007, but after this period, there has been convergence toward a positive assessment of the aid-growth relationship (Mekasha and Tarp 2019). ...
Previous research has explored various channels in the aid-growth relationship such as the real exchange rate, changes in manufacturing output, institutional capacity, and governance. This paper puts forward a new mechanism: human capital accumulation. International organizations financially support and/or directly collaborate with educational institutions to establish courses. The development sector, borne out of aid, demands skilled workers. The workforce in turn develops human capital to meet this demand. There is a consequent change in the skills composition in the host country, and thus the types of skills available to employers in the labor market. This may have implications for long-run growth. These mechanisms are explored through mixed-methods analysis of human capital accumulation at the tertiary level in Sierra Leone, a small low-income, aid-dependent country. The data show that post-war interventions have given rise to courses that develop skills that are demanded by local and international non-governmental organizations, but not the formal private sector. This shift toward development-type qualifications has led to excess supply of these graduates, alongside a shortage of graduates with training in science, technology, engineering, and mathematics. The latter are highly demanded by the private sector.
