This paper provides a critical analysis of the growth regressions in Burnside and Dollar (2000). First, we analyze the relation between aid and government expenditure in a modified neoclassical growth model. We find that while good policies spur growth they may at the same time lead to...

This paper examines the relationship between foreign aid and growth in real GDP per capita as it emerges from simple augmentations of popular cross-country growth specifications. It is shown that aid in all likelihood increases the growth rate, and this result is not conditional on "good"...

We analyse the Granger causal relationships between foreign direct investment (FDI) and GDP in a sample of 31 developing countries covering 31 years. Using estimators for heterogeneous panel data we find bi-directional causality between the FDI-to-GDP ratio and the level of GDP. FDI has a...