01940cas a2200253 a 4500 AALejournalIMF008865 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451861457 1018-5941 BD-DhAAL BD-DhAAL Subramanian, Arvind. What Undermines Aid's Impact on Growth? / Arvind Subramanian, Raghuram Rajan. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (54 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We examine one of the most important and intriguing puzzles in economics: why it is so hard to find a robust effect of aid on the long-term growth of poor countries, even those with good policies. We look for a possible offset to the beneficial effects of aid, using a methodology that exploits both cross-country and within-country variation. We find that aid inflows have systematic adverse effects on a country's competitiveness, as reflected in a decline in the share of labor intensive and tradable industries in the manufacturing sector. We find evidence suggesting that these effects stem from the real exchange rate overvaluation caused by aid inflows. By contrast, private-to-private flows like remittances do not seem to create these adverse effects. We offer an explanation why and conclude with a discussion of the policy implications of these findings. Mode of access: Internet Rajan, Raghuram. IMF Working Papers; Working Paper ; No. 2005/126 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/126/001.2005.issue-126-en.xml IMF e-Library