Influence of Foreign Aid on Economic Growth: the Case of CIS Countries

Abstract

Necessity of foreign funds for development of economy is broadly discussed in world economic literature. Many countries in the world receive development assistance to overcome poverty, improve living standards of population and develop economy of the country in general. However, receiving foreign aid during many decades, not all countries managed to improve economic performance. Thus, this research investigates influence of foreign aid on economic growth among CIS countries during the period between 2000 and 2012. Aid – growth linkage empirical estimation was accompanied by macroeconomic policy condition and institutional quality as well. Results of estimation showed that foreign aid does not influence on economic growth. Important factors of economic growth in the region came out to be FDI, budget balance, government effectiveness, oil – exports and world business cycles.