Type of Publication: Discussion contributions

Aid, Spending Strategies and Productivity Effects - A Multi-Sectoral CGE-Analysis for Zambia

Author(s):

Clausen, V.; Schürenberg-Frosch, H.

Publisher:

Ruhr Economic Papers

Number of Report or Contribution:

127

Location(s):

Essen

Publication Date:

2009

ISBN:

978-3-86788-142-5

ISSN:

1864-4872

Language:

english

Keywords:

Foreign aid, applied general equilibrium, Zambia, Dutch Disease, productivity

Citation:

Download BibTeX

Abstract

Numerous econometric studies fail to detect a signicant and robust relationship
between international aid and economic growth in the recipient countries.
Dutch Disease effects might be responsible for this result.This paper examines
the relation between aid and its effectiveness in a multi-sector multihousehold
Computable General Equilibrium (CGE)-framework. Given that
international transfers to African countries increasingly take the form of general
financial support to the government, different spending strategies and
their macroeconomic, sectoral and distributional effects are evaluated in a
two-stage simulation making a distinction between immediate direct effects
and possible long-run effects from increased productivity. While the model
simulates the effects of additional aid in Zambia it can be used as a blueprint
for other African countries.