Literature Review

What does existing work tell us about aid’s macroeconomic impact? I have argued elsewhere (1992a and 1992b) that much of it tells us very little. Rather than repeat those arguments, this chapter will present an accounting framework (section 2.2), which is a useful basis for identifying the macroeconomic effects which aid may or may not have. The framework is used in a discussion of key theoretical debates. Results from existing studies are discussed in section 2.3, and the main points are summarized in section 2.4.