Journal of Economic Perspectives: Vol. 17 No. 3 (Summer 2003)


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Can Foreign Aid Buy Growth?

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Easterly, William. 2003. "Can Foreign Aid Buy Growth?" Journal of Economic Perspectives, 17(3): 23-48.

DOI: 10.1257/089533003769204344


The widely publicized finding that "aid promotes growth in a good policy environment" is not robust to the inclusion of new data or alternative definitions of "aid," "policy" or "growth." The idea that "aid buys growth" is on shaky ground theoretically and empirically. It doesn't help that aid agencies face poor incentives to deliver results and underinvest in enforcing aid conditions and performing scientific evaluations. Aid should set more modest goals, like helping some of the people some of the time, rather than trying to be the catalyst for society-wide transformation.

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Easterly, William


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