Does foreign aid contribute to or impeded economic growth?

Yiew, Thian Hee; Lau, Evan

doi:10.14254/2071-8330.2018/11-3/2

Cited by 76 publications

(57 citation statements)

References 31 publications

(50 reference statements)

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“…It is only in low-quality policy environments that Easterly's "curse of aid" sets in: aid flows that exceed a certain threshold become even inimical to growth, in line with the diminishing returns hypothesis. These results are also consistent with the narratives found in the literature: high aid flows in "bad" policy environments can generate conflicts of interest and policies that harm growth (e.g., Yiew and Lau [2018]). Moreover, 2 As early as 1987, Mosley et al coined the term, "macro-micro paradox" in reference to the inharmonious findings regarding aid effectiveness at the macro and micro levels.…”

Section: Introductionsupporting

confidence: 90%

Revisiting the aid-growth nexus in light of the Sachs-Easterly debate

Daway-Ducanes

Arzadon

2020

PRE

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Section: Introductionsupporting

confidence: 90%

Revisiting the aid-growth nexus in light of the Sachs-Easterly debate

Daway-Ducanes

Arzadon

2020

PRE

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“…Enhancing the potential of the economy (a larger proportion of skilled human resources and higher intensity of investment) indicates a positive effect of government borrowing, although in the case of investments, it is only partial. This study confirms that there is a tendency for a combination of direct government funding at the expense of national sources and lending sources, as well as indirect state financing instruments that ultimately serve as an incentive for economic growth (Szarowská, 2017;Yiew & Lau, 2018).…”

Section: Literature Reviewsupporting

confidence: 75%

“…In addition to external loans, foreign direct investment and the size of the population are significantly affected by economic growth. Simionescu, Dobeš, Brezina, and Gaal (2016) proved that both FDI and population are more important determinants of GDP than goverment debt (Tomasz, 2015;Yiew & Lau, 2018;Simionescu, Dobeš, Brezina, & Gaal, 2016).…”

Section: Literature Reviewmentioning

confidence: 99%

Economic growth: macroeconomic effects of Public Borrowings at the global level

Buryk

Bashtannyk

Ragimov

2019

Problems and Perspectives in Management

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The study examines the peculiarities of the impact of public debt on the economic growth of states. The aim of the study was to analyze and identify the determinants of the impact of government borrowing on economic growth. The following research methods have been applied: analysis and synthesis of data and theoretical work, comparative analysis, statistical, correlation, cluster and discriminant analysis. According to the results of the survey, it is established that the growth of government borrowing can have both a negative and a positive effect on the economy, provided that it implements as the share of government debt to GDP, does not exceed 60% and is implemented in the form of financial investments (golden rule of public finance). The state’s deficit is allowed provided that state assets grow; current income from investment fully covers current expenses. The results of clusterization allowed to allocate 3 groups of states: states that demonstrated the economic downturn; states characterized by slow economic growth; states that were characterized by high level of economic growth. The first group of states (the countries with economic downturn) observed a negative high level of government debt and GDP. The results showed the low level of domestic borrowing development in low and middle income countries, which in developed countries allows governments to finance the investment projects on the basis of local loans (municipal bonds, infrastructure bonds, mainly medium and long-term), increase the debt burden in terms of economic recession.

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“…Although official development assistance flows have increased, their developmental impact is not directly tangible compared to remittances that flow directly to their beneficiaries, with potential impacts on health, education, small-scale businesses, and the real sector. Moreover, several previous studies note that official development assistance does not necessarily translate to high economic growth rates (Yiew and Lau 2018;Phiri 2017;Murshed and Khanaum 2014). Historically, official development assistance has been misappropriated at both state and nongovernmental levels (Elayah 2016;Kono and Montinola 2013;Bodomo 2013;Doucouliagos and Paldam 2011;Maipose 2000).…”

Section: Remittance Flows In Kenyamentioning

confidence: 99%

Do migrant remittances matter for financial development in Kenya?

Misati¹,

Kamau²,

Nassir³

2019

Financ Innov

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The paper analyzes the relationship between remittances and financial development using Kenyan quarterly data from 2006 to 2016. Five different indicators of financial development are used: credit to the private sector as a share of GDP, the number of mobile transactions, the value of these mobile transactions, the number of mobile agents, and the number of bank accounts. The results from using an autoregressive distributed lag demonstrate a strong, positive relationship between remittances and financial development in long-run equations. This suggests that higher levels of remittances provide opportunities for recipients to open bank accounts, enhance their savings, and access financial systems, in addition to exposing the previously unbanked to both new and existing financial products. The results also confirm the potential advantage of embracing modern and advanced technology to facilitate international mobile transfers. Using international remittance transfers through mobile technology reduces costs by eliminating the need for physical branches and personnel to attend to walk-in customers. Aside from offering convenience and safety for remittance actors, this method also dominates traditional remittance business models. Therefore, a policy window exists for the government to leverage on remittances as a tool of financial inclusion and depth, and particularly through the continued expansion of regulatory space to accommodate the wider use of international mobile remittance transfer channels. Moreover, given the strong, positive relationship between remittances and credit to the private sector as indicated by its share of GDP and number of bank accounts, commercial banks and other players in the remittance market may also find it useful to develop customized products for migrants to access their remittances. For example, financial intermediaries can consider providing better deposit interest rates for diaspora deposits compared to deposits made in the local currency. Further, these institutions can allow regular remittance flows to act as collateral for the allocation of credit, among other incentives to tap into the significant potential of money remitted by migrants to Kenya. The study also recommends that the government consider expanding exploitation of diaspora bonds and diaspora savings and credit cooperative societies while drawing lessons from other countries' previous attempts.

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Does foreign aid contribute to or impeded economic growth?

Cited by 76 publications

References 31 publications

Revisiting the aid-growth nexus in light of the Sachs-Easterly debate

Revisiting the aid-growth nexus in light of the Sachs-Easterly debate

Economic growth: macroeconomic effects of Public Borrowings at the global level

Do migrant remittances matter for financial development in Kenya?

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