Positive Effects Of Foreign Aid On Economic Growth

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Sub-Saharan Africa has been the centre of poverty, low human development indicators and carries a disproportionate burden of global disease.It has been the major recipient of various health interventions but the results are not impressive. In this section I present the literature on aid effectiveness on parameters such as growth and as well as on various development outcomes particularly health which is the main focus of the study. A bulk of the literature focusses on impact of foreign aid on growth yet no clear result emerges. Papain (1973), Dowling and Hiemenz (1982), Gupta and Islam (1983), Hansen and Tarp (2000), Gomanee (2003), Dalgaard (2004), and Karras (2006) all conclude that foreign aid has a positive impact on economic growth. Rajan and Subramaniyam (2005) find little evidence of the positive impact of foreign aid on economic growth and no evidence that aid works better in good policy environment or certain kinds of aid work better than others.Minou and reddy (2010) find robust evidence that development aid has a positive impact on long-term economic growth. Anisul Islam(2006) studies the impact of foregin aid on economic growth for Bangladesh economy for the period 1972-88 .He finds little evidence of aggregate impact of aid on growth. Domestic resources have more impact on economic growth than foreign resources.…show more content…
The paper also illustrates that loans are more effective than grants .Victor Levy (1988) finds that aid has contributed positively to investment and economic growth of low income countries in sub Saharan

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