Economics Research Institute Study Paper
Utah State University Department of Economics
This paper investigates the impact of foreign aid on foreign investment when foreign aid is used to finance a public consumption good. By formulating and analyzing a three-good general equilibrium model, we show that such foreign aid could crowd out foreign investment, given a factor intensity condition.
Beladi, Hamid and Oladi, Reza, "Does Foreign Aid Impede Foreign Investment?" (2006). Economic Research Institute Study Papers. Paper 332.