The Anarchy of Numbers

By D. Roodman. 2007

603 citations recorded by the source corpus.

Recent literature contains many stories of how foreign aid affects economic growth. All the stories hinge on the statistical significance in cross-country regressions of a quadratic term involving aid. Among the stories are that aid raises growth (on average) 1) in countries where economic policies are good; 2) in countries where policies are good and a civil war recently ended; 3) in all countries, but with diminishing returns; 4) in countries outside the tropics; 5) in countries with difficult economic environments, characterized by declining or volatile terms of trade, natural disasters, or low population; or 6) when aid increases in countries experiencing negative export price shocks. The diversity of results prima facie suggests that many are fragile. Easterly et al. (2004) find the aid-policy story (Burnside and Dollar, 2000) to be fragile in the face of an expansion of the data set in years and countries. The present study expands that analysis by applying more tests, and to more studies. Each test involves altering just one aspect of the regressions. All 19 tests are derived from sources of variation that are minimally arbitrary. Twelve derive from specification differences between studies, what Leamer (1983) calls “whimsy.” Three derive from doubts about the appropriateness of the definition of one variable in one study. The remaining four derive from the passage of time, which allows sample expansion. This design allows an examination of the role of “whimsy” in the results that are tested while minimizing “whimsy” in the testing itself. Among the stories examined, the aid-policy link proves weakest, while the aid-tropics link is most robust.

Subfields: Development, Information Systems, Safety Research

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Citations in the corpus

Aid Effectiveness on Growth. A Meta Study (2008, methodology): “In macroeconomics such as the AEL it may take some years to obtain independent data sets, but see e.g. Easterly, Levine and Roodman (2004) and Jensen and Paldam (2006).”
Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth* (2012, positive): “Easterly (2003), Easterly et al. (2004) and Roodman (2007) cast serious doubt on the conclusions of a majority of these studies.”
The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis (2014, neutral): “9 Several in ‡uential studies have used this type of transformed data without …rst checking their empirical validity (see e.g. Dollar and Easterly 1999 and the studies surveyed in Roodman 2007) despite the ease with which it can be done.”
Does aid for trade enhance export performance? Investigating on the infrastructure channel (2012, neutral): “Starting from a macroeconomic perspective, the literature on the impact of aid on growth has so far failed to provide strong and convincing results (Rajan and Subramanian, 2008; Roodman, 2007), partly because of its effects on trade via a “Dutch disease” phenomenon related to real exchange rates.”
Does Foreign Aid Target the Poorest? (2016, neutral): “Easterly 2003; Roodman 2007.”
More Dollars than Sense: Refining Our Knowledge of Development Finance Using AidData (2011, background): “Some scholars, such as Collier and Dollar (2002), have confirmed these findings, but others have disputed them (Dalgaard & Hansen, 2001; Dalgaard, Hansen, & Tarp, 2004; Easterly, Levine, & Roodman, 2004; Roodman, 2007).”
The Politics of Effective Foreign Aid (2010, methodology): “Most studies examining the relationship between aid and growth use some form of the OECD Development Assistance Committee data, aggregated across all sectors and all donors (Burnside & Dollar 2000, Easterly et al. 2004, Roodman 2007).”
Does Foreign Aid In Education Promote Economic Growth? Evidence From Sub-Saharan Africa (2014, methodology): “Thus, following the recommendations of Roodman (2007b), we report the instrument count for the GMM estimations, test for robustness to reductions in the instrument count and also test for the validity of the instruments.”
On the simultaneity problem in the aid and growth debate (2013, methodology): “This twostep estimation strategy enables to: (i) obtain an understanding of how foreign 1 See for example Burnside and Dollar (2000), Hansen and Tarp (2001), Dalgaard et al. (2004), Easterly et al. (2004), Roodman (2007), Bourguignon and Sundberg (2007), or Rajan and Subramanian (2008).”
Fighting terrorism in Africa: Benchmarking policy harmonization (2018, neutral): “…about initial endowments and multiple equilibria that are associated with system GMM estimations, some researchers are increasingly distrustful of findings from system GMM that are partly based on a difference equation (see Roodman, 2007, 2008, 2009a; Bazzi & Clemens, 2010; Clemens et al., 2012).”