|
This paper
examines whether developing countries receiving more foreign aid
also have higher rates of urbanization. After presenting a simple
theoretical model, empirical work is conducted on a cross-section of
countries during the 1990s. The paper finds that foreign aid is
positively associated with subsequent urbanization even after
controlling for income levels, population, and regional
characteristics. If this association is given a causal
interpretation, the results indicate that foreign aid enlarges urban
areas. |