Counting Chickens When They Hatch: The Short-term Effect of Aid on Growth

Most recent research on foreign aid and economic growth is flawed because it tests the effects of many types of aid that could not possibly raise growth in the short term. Please join us as Michael Clemens, Steven Radelet, and Rikhil Bhavnani present the findings of CGD's new Working Paper #44. Setting aside emergency humanitarian aid as well as aid whose growth effects are only realized over the long term (like aid to build primary schools), the authors focus on a large sub-category of aid flows that actually have the potential to affect growth in the short term (like aid to build roads). In "Counting chickens when they hatch: The short- term effect of aid on growth", the authors reveal a very strong and robust relationship between this "short-impact" aid and economic growth.While aid does not work equally well everywhere, its average effect is large and easy to detect across the portfolio of recipient countries.