Publication

This paper argues that it is unlikely that a long-term, sustained and predictable increase in aid would, through the impact of the Dutch Disease, do more harm than good. The author gives three reasons but stresses that the macroeconomic effects of aid can cause substantial harm if the aid is not sustained until its benefits are realized. To avoid doing harm, the author emphasizes that aid should be used in part to promote economic growth which maximizes the chances that the long-term productivity and growth benefits will offset the adverse effects.