Is there a long-run relationship between ODA and GDP? The case of India

Abstract

The existence of a long-run relationship between ODA and per capita GDP in India is examined, using annual data for 1961–92. A necessary condition for such a relationship is that the two series are integrated of the same order. Unit root tests indicate that ODA is I (0) while GDP is I (1), hence no long-run relationship exists. Thus, at the macroeconomic level, aid neither stimulates economic development nor detracts from it. A corollary is that aid is not responsive to changes in India's income.