The Impact of Foreign Aid on Economic Growth in Low-Income Countries: 2001-2015

Abstract

This paper analyzes the impact of foreign aid on economic growth of low income countries. The study uses annual data on a panel of 27 low income countries for the period 2001 to 2015. In this study, the hypothesis that foreign aid can promote economic growth in low income countries was explored. The paper uses fixed effect estimations to estimate the impact of foreign aid on economic growth in low income countries. While findings of previous studies on this topic demonstrate generally mixed results, findings of this paper indicates that foreign aid does not have any significant impacts on economic growth in low income countries.