Central Data Catalog

Citation Information

Type Working Paper
Title Aid and Growth Evidence from Firm-Level Data
Publication (Day/Month/Year) 2015
URL https://www.banque-france.fr/uploads/tx_bdfdocumentstravail/DT-563_01.pdf
This paper explores the impact of foreign aid on firm growth for a panel of 4,342 firms in 29 developing
countries, 11 of which are in Africa. Using the World Bank Enterprise Surveys data and controlling for
firm fixed effects, we find a positive impact of foreign aid on firms’ sales growth. This result is robust to
several checks, notably to the instrumentation of aid and to estimations on various sub-samples. We then
provide evidence that the positive effect of aid is especially strong for firms operating in sectors that are
intensive in infrastructure and external finance, suggesting that aid may improve firm performance through
the alleviation of infrastructure and financing constraints in developing countries.

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