Aid, Dutch Disease, and Manufacturing Growth - Working Paper 196
Decades of research have been unable to conclusively show either a positive or negative effect of aid on economic growth in poor countries. CGD senior fellow Arvind Subramanian and Raghuram G. Rajan use a new technique in their latest working paper that suggests aid slows the manufacturing sector by appreciating the exchange rate and making the production of manufacturing goods less profitable. And if aid slows the manufacturing sector, the implications for overall growth could be adverse.
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