Does food aid really have disincentive effects? : New evidence from Sub-Saharan Africa

Limited empirical evidence exists either to refute or confirm the pervasive belief that food aid has significant disincentive effects on recipient food production. Using household-level data from rural Ethiopia, we demonstrate that while simple descriptive statistics appear consistent with the disincentive effects hypothesis, once one controls properly for the endogeneity of food aid receipt, no empirical support remains for the hypothesis that food aid creates disincentive effects among recipient households. The macro economic evidence yields similar findings. Applying vector autoregression methods to national-level data, controlling for possible confounding variables, we find that food aid has no disincentive effect on food production. (c) 2005 Elsevier Ltd. All rights reserved.