Premium
Development Aid to Agriculture and Economic Growth
Author(s) -
Kaya Ozgur,
Kaya Ilker,
Gunter Lewell
Publication year - 2012
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2012.00658.x
Subject(s) - economics , agriculture , aid effectiveness , estimation , development aid , investment (military) , panel data , humanitarian aid , developing country , foreign direct investment , food aid , generalized method of moments , macroeconomics , development economics , economic growth , econometrics , politics , political science , food security , ecology , management , law , biology
The link between foreign aid and economic growth has been a controversial issue with no strong consensus so far. This paper argues that a possible reason why some studies may conclude that aid is ineffective in promoting economic growth might be that not all aid is given for development purposes (i.e. aid given for strategic considerations, humanitarian reasons or emergency relief). This study classifies foreign aid into four subcategories: agricultural aid, social infrastructure aid, investment aid, and non‐investment aid. Using the generalized method of moments (GMM) estimation technique on a Barro type growth regression with panel data from the aid recipient economies, this paper finds that when aid is directed to the agricultural sector of the developing countries, it is positively and significantly related to growth and can affect economic growth in the short run.