The curse of aid

  title={The curse of aid},
  author={S. Djankov and J. G. Montalvo and Marta Reynal-Querol},
  journal={Journal of Economic Growth},
  • S. Djankov, J. G. Montalvo, Marta Reynal-Querol
  • Published 2008
  • Journal of Economic Growth
  • Foreign aid provides a windfall of resources to recipient countries and may result in the same rent seeking behavior as documented in the “curse of natural resources” literature. In this paper we discuss this effect and document its magnitude. Using panel data for 108 recipient countries in the period 1960–1999, we find that foreign aid has a negative impact on institutions. In particular, if the foreign aid over GDP that a country receives over a period of 5 years reaches the 75th percentile… CONTINUE READING