The paper under analysis covers the topic of the relationship between foreign aid and economic growth in developing countries. The researchers report a U-shape relationship between the two variables (Yiew & Lau, 2018). Foreign aid is initially detrimental to growth but is a positive force over the long run. There is a raging debate on whether continued financial help from developed countries helps or impedes progress in the global south. While this article supports the former argument, others hold a different opinion. One such opinion is that foreign aid does not impact economic growth (Babalola & Shittu, 2020). This opinion continues the discussion and points to a need for further investigation.
A critical analysis of the two arguments presented above yields some clarification. The first article samples 95 developing countries and uses population (POP) and foreign direct investment (FDI) as control variables (Yiew & Lau, 2018). Further, the authors report that POP and FDI may be stronger determinants of GDP than foreign aid. On the other hand, the second study uses a sample of 26 countries in West Africa and institutional quality as the control variable (Babalola & Shittu, 2020). While the main article uses a more substantial sample size than the second one, its results point to a very high likelihood that foreign aid does not impact economic growth. Therefore, the second argument, that foreign aid has a neutral impact on GDP emerges as the most plausible.
This article was chosen because it provides insight into one of the most pressing issues in international politics. It is comprehensive and covers all crucial aspects of the problem under discussion. Help from developed countries might seem like the best thing to do when it might not be. There is a raging debate on the real effect of foreign aid on developing countries, and this paper offers ample clarification.
The most important lesson in the article is that substantial consideration needs to be put behind foreign aid. Developed countries should do everything they can to help those developing, but direct financial help might not be the best way to go about it. Instead, what these entities might need is other forms of help, like foreign direct investments to bolster growth in these countries and ensure it is sustainable.
References
Babalola, S., & Shittu, W. (2020). Foreign aid and economic growth in West Africa: examining the roles of institutions. International Economic Journal, 34(3), 534-552. Web.
Yiew, T. H., & Lau, E. (2018). Does foreign aid contribute to or impeded economic growth? Journal of International Studies Vol, 11(3), 21-30. Web.