Foreign capital, domestic savings and economic development

What are the Impact of Foreign Aid to the Economic Growth? Time Series Analysis with New Evidence from Tanzania

“…These results are also supported by the previous empirical and theoretical literatures such as [2,8,9,11,12,30]. The negative impact of foreign aid to economic growth has several implications.…”

Foreign Aid, Domestic Savings, And Economic Growth In South Asia

“…Instead, foreign economic assistance could retard economic development by lowering the domestic saving rate. Rajan and Subramanian (2008) also documents a similar conclusion to that of Griffin (1970). However, Papanek (1973), in a cross-country regression analysis of 34 countries in the 1950s and 51 countries in the 1960s, treating foreign aid, foreign investment, other flows and domestic savings as explanatory variables, finds that foreign aid has a substantially greater effect on growth than on the other variables.…”

“…Empirical studies related to foreign capital flow and economic growth show evidence for and against the theoretical arguments regarding the impact of foreign capital. Griffin (1970), for instance, argues that foreign aid does not contribute to economic growth and that it fails to foster democratic political regimes. Instead, foreign economic assistance could retard economic development by lowering the domestic saving rate.…”

Growth, Savings, and Capital Formation in a Rapidly Changing Environment: Challenges Facing Caribbean Policy Makers

“…There is a view that inflows of foreign capital may have undermined the domestic savings effort, thus perpetuating the dependence on foreign capital. In other words, there is an inverse relationship between domestic savings and foreign capital inflows (Griffin, 1970).…”