Research On The Impact Of Policy On The Relationship Between Aid And Growth

Foreign aid has become an important resource in the development of economic,political and social in recipient countries. The effectiveness of foreign aid is an importantresearch field in the long-term concern of the academic circles, whether foreign aidpromote the economic growth of recipients’ is an important topic in the field of economicdevelopment. One purpose of foreign aid is to promote the most extensive economicdevelopment in recipient countries. In this paper we take the influence of recipient’ policyenvironment on the relationship between aid and recipients’ economic growth as theresearch subject.Firstly, we make theory general description of the foreign aid developmentbackground, purpose, significance, definition and composition and the development trendetc, and then do some research works on literatures which about the relationship betweenaid and recipients’ growth, as well as the influence of recipients’ policy environment on therelationship between aid and recipients’ growth. To understand the importance of theforeign aid to recipients’ economic growth and whether policy environment play animportant role in this relationship.Secondly, according to the large amount of literatures, we choose variables andmeasurement method which often use, and then establish a economic growth function.Analysis the influence of each explanatory variable to recipient countries’ economic growthby using the method of Stata analysis. Then build policy index by weighted policy variablesaccording to their explanatory ability. After that set up a growth function which containpolicy index above mentioned. Analysis results indicate that the effect of recipients’macroeconomic environment on the relationship between and and recipients’ economicgrowth is significant and positive.Once again, take China as an donor aid Cambodia as an example, reveal that donorsmust take recipients’ basic conditions as foothold, establish reasonable assistance program,otherwise, the original intention of aid will not implemented, instead, may even hinder theeconomic development of recipient countries. And in the end of this part make some policysuggestions to China for promoting recipients’economic growth.Finally, on the basic of the results of empirical analysis and literature analysis results, take some advices from the angle of recipients. Recipients should not rely on donors,instead, improve their own development potentials, domestic policy environment andnational autonomy to improve recipients’ backward situations. Donors should also takeenough advance investigations before aid programs, understand the basic situation ofrecipient countries, set up reasonable assistance plan and do perfect evaluation after the endof assistance. Both sides should make joint efforts to improve aid effectiveness, reducepoverty, promote the economic development of recipient countries.