ABSTRACT

Direct and indirect relationships between aid and economic growth can be effectively investigated by expansion methodology. Expansion Methodology questions the stability of parameters by investigating the extent of their ‘drift’ across ‘contextual space’. Multiple regression has been used to relate economic growth to variables brought forth from theory and from empirical research. Aid was then added to the list of independent variables. Expansion Methodology allows the researcher to study how these relationships vary across a context by modifying the model. Generally speaking, the initial model represents an important relationship that has been taken from theoretical literature and empirical studies. The expansion equations model a possible contextual variation of the initial model. The expansion equations model the potential variation of the relationship between economic growth and its determinants in response to levels of economic aid. And the final equation captures both the initial model and its potential variation with aid.