Aid and growth in fragile states

Arbeitspapier

The literature on aid has come a long way in recent years, and as a result we now know much more about aid effectiveness than possibly ever before. But significant gaps in knowledge remain. One such gap is the effectiveness of aid in the so-called ‘fragile states’, countries with critically low policy and institutional performance ratings. The current paper addresses this void by examining possible links between aid and economic growth in fragile states. It finds that: (i) growth would have been 1.4 percentage points lower in highly fragile states in the absence of aid to them, compared to 2.5 percentage points in other countries; (ii) highly fragile states from a per capita income growth perspective can only efficiently absorb approximately one-third of the amounts of aid that other countries can, and; (iii) while from the same perspective most fragile states are under-aided, to the extent that they could efficiently absorb greater amounts of aid than they currently receive, many of the highly fragile states are substantially over-aided in this sense. The overall conclusion is that donors need to look very closely at their aid to the sub-set of fragile states deemed in this paper as highly fragile.

Object Details

• ISBN: 978-92-9230-043-2
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIDER Research Paper ; No. 2008/03

Classification and Topics

• Classification: Wirtschaft ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General ; Foreign Aid ; Macroeconomic Analyses of Economic Development ; Economic Growth and Aggregate Productivity: General ; Institutions and Growth
• Subject: foreign aid ; economic growth ; fragile states ; policies ; absorptive capacity ; Entwicklungshilfe ; Wirtschaftswachstum ; Politische Stabilität ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): McGillivray, Mark ; Feeny, Simon
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/63412
• Last update: 10.03.2025, 11:44 AM CET