Measuring the Effectiveness of Official Development Assistance on the Economic Growth of Developing Countries: A 2009–2013 Analysis

This chapter analyses the effects of the Official Development Assistance on GDP per capita of developing countries. In order to understand what the Official Development Assistance is, we take a picture of the present aid delivery system. A survey of the theoretical and empirical literature was performed in order to point out which are the main results and the main suggestions to improve the aid effectiveness. The study uses a group of 92 developing countries covering Asia, Africa, Europe and Latin America for period 2009-2013 analysed with multiple linear regression. The main result of this study indicates that foreign aid has a negative impact on GDP per capita and the coefficient is always statistically significant. Aid appears not to be effective even if we observe the interaction between the foreign aid variable and the “low-income” dummy: the coefficient has a positive sign and it is statistically significant but it is not big enough to make aid effective.