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Foreign Aid and
Does it Increase
Economic Growth?
By James Mumma
Participation in Aid with Regard to Need
Is Aid determined by need?
Receiving lots of Aid
Receiving less Aid
Badly in
Somewhat in
need of aid need of aid
Cell 1
Cell 2
Cell 3
Cell 4
Selection Question?
• Who receives Aid?
In reality aid is determined by much more than need
•Trade openness
•Civil liberties
•Colonial status
•Direct foreign investment
•Initial income (PPP)
Selection Cases: Uganda, Ghana, Tanzania, Ethiopia
Performance Question?
• What causes aid to in turn lead to increased
economic growth?
– Measure growth using Per Capita GDP
•Political Status?
•Amount of aid received?
•“Political will”?
•Overall Dependence on Aid?
•As % of government expenditure?
•Initial size of GDP per capita?
The End