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A review of the impact of foreign aid on domestic saving

Author

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  • Workneh, Migbaru Alamirew
  • Francken, Nathalie
Abstract
This paper tried to review the main literature on foreign aid and domestic saving in developing countries between 2000 and 2013, both theoretical and empirical literature. The main arguments of scholars in this area are reviewed. There are two opposite arguments on how the foreign aid affects domestic saving. In one side, scholars argue that foreign aid can be stimulant for economic growth through domestic saving. On the other hand, other scholars strongly argue that rather than being stimulant for the economic growth and improve the life of the society, foreign aid may able the dictator governments in developing countries to finance their political regime and increases corruption. The inconsistency and disagreement on the impact of foreign aid may result due to the difference in estimation techniques, control variables, and the aggregate estimation for the whole developing countries and for a specific region like Sub-Saharan Africa since countries are very different in political ideology and governance, economic policy and social structures.

Suggested Citation

  • Workneh, Migbaru Alamirew & Francken, Nathalie, 2015. "A review of the impact of foreign aid on domestic saving," MPRA Paper 92174, University Library of Munich, Germany, revised 13 Feb 2019.
    • Handle: RePEc:pra:mprapa:92174
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Foreign Aid; Domestic Saving; Developing Countries;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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