Journal Article

Foreign aid and growth: A Sp P-VAR analysis using satellite sub-national data for Uganda.

Date Published

Sep 1, 2018

Authors

Andrea Civellia, Andrew Horowitz, Arilton Teixeira

Publisher

Journal of Development Economics

Citation

Civellia, A., Horowitz, A., & Teixeira, A. (2018). Foreign aid and growth: A Sp P-VAR analysis using satellite sub-national data for Uganda. Journal of Development Economics, 134, 50-67.

Note: A version of this article was previously published as an AidData Working Paper.

Announcement

We develop a measurement strategy for the impact of foreign aid based on a regional spatial panel vector-autoregressive model (Sp P-VAR). We illustrate the strategy using Ugandan districts. Data for the regional units (ADM2) is assembled combining satellite sources for socio-economic activity, geo-located aid disbursements, and traditional household surveys. We find statistically significant positive and persistent effects of aid shocks on nighttime luminosity. Mapping nightlights to economic activity, the results suggest that the economic magnitude of these effects is small, but significant – with a multiplier between 4 and 5 in the long-run. The VAR addresses endogeneity concerns associated with non-random aid assignment.

Funding: This research was supported by USAID’s Global Development Lab through a cooperative agreement with AidData (#AID-OAA-A-12-00096).

Andrew Horowitz

Andrew Horowitz

Professor of Economics at the Sam M. Walton College of Business at the University of Arkansas

Arilton Teixeira

Arilton Teixeira

Director of FUCAPE Business School

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