The paper examines empirically the proposition that aid to poor countries is detrimental for external competitiveness, giving rise to Dutch disease type effects. At the aggregate level, aid is found to have a positive effect on growth of labour productivity. A sectoral decomposition shows that...

Throughout the period 1871-1938, the average British worker was better off than the average German worker, but there were significant differences between major sectors. For the aggregate economy, the real wage gap was about the same as the labour productivity gap, but again there were important...