Central Data Catalog

Citation Information

Type Conference Paper
Title German Research Committee Development Economics 2014 Conference
Publication (Day/Month/Year) 2014
URL http://www.solvay.edu/sites/upload/files/CEB/CEB_RSAEM/2014_2015/aid_and_growth.pdf
This paper explores the impact of foreign aid on firms growth for a panel of 5,640 firms in 29 developing
countries, 11 of which in Africa. Using the World Bank Enterprise Surveys data and controlling for firms
fixed effects, we find a positive impact of foreign aid on sales growth. This result is robust to various checks,
notably to the instrumentation of aid. We then identify the main infrastructure obstacles to firms growth
and examine whether foreign aid contributes to relaxing those constraints. We find that electricity and
transport are perceived as important constraints which tend to decrease the growth rate of firms, as well
as the utilization of their productive capacity. Evidence on the impact of aid on infrastructure obstacles
suggests that total aid and aid to the energy sector tend to decrease electricity obstacles. We also show that
transport aid projects, geo-localized at the region level, tend to decrease the transport obstacles

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