In a paper pub­lished in 2011 Markus Brückner, then of the Uni­ver­sity of Ade­laide, esti­mates the impact of aid on 47 coun­tries between 1960 and 2000. Donors tend to give less to faster-​​growing coun­tries, he says, which can pro­duce a neg­a­tive cor­re­la­tion between growth and aid. By looking at periods when severe weather and dra­matic shifts in com­modity prices had big impacts on growth, Mr Brückner iden­ti­fied vari­a­tions in for­eign aid that were not driven by changes in income per person. He found that a 1% rise in for­eign aid lifted growth in income per person by about 0.1 per­centage points.

Osborne Jackson of North­eastern Uni­ver­sity in Mass­a­chu­setts looked at instances of donors boosting aid across the board when one of the coun­tries they are assisting suf­fers a nat­ural dis­aster (thus, the wind­fall in coun­tries spared the dis­aster is not linked to eco­nomic growth). He con­cluded that aid increases house­hold con­sump­tion, which spurs growth in the short term, but not in the long run. A study by the World Insti­tute for Devel­op­ment Eco­nomics Research has reviewed all peer-​​reviewed papers on aid and growth pub­lished since 2008. It con­cludes that the evi­dence that aid boosts growth is itself growing rapidly.

Read the article at The Economist →