Pollution, health and economic growth

• An endogenous growth model is developed for an aid-receiving economy with pollution.
• The growth impacts of aid allocation on healthcare and pollution abatements are examined.
• The optimally growth rate of the economy is determined.

This paper examines the growth impacts of aid allocation on healthcare and pollution abatement in an endogenous growth model, and finds that the aid tied to them contributes positively to the equilibrium growth rate. Nonetheless, the growth rate can be reduced or even impaired if the ratio of aid on pollution abatement is lowered.