Macroeconomic impact of external assistance: The case of Ethiopia

Generally, the role of foreign assistance in the process of economic development has thus far been debatable. For some countries it is believed to have helped to increase their investment resources, to ease their foreign exchange constraint and to create a mul tiplier effect on their overall economic development. On the other hand, the record for other countries, as suggested by some studies, seems to have been counterproducti ve. Thus, the impact of external aid on growth remains ambiguous and controversial. The impact of aid on the Ethiopian economy could be assessed in this context. The country is one of the least developed countries whose investment resources are very much limited and thi s problem is compounded by severe foreign exchange constraint. Prima facie, external assistance