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Is Aid for Infrastructure Effective? A Difference-in-Difference-in-Differences Approach

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  • Julian Donaubauer

    (Helmut-Schmidt-University Hamburg)

  • Peter Nunnenkamp

    (Kiel Institute for the World Economy)

Abstract

The effects of foreign aid on the endowment of recipient countries with infrastructure have received surprisingly little attention in the empirical literature. This paper addresses this question by performing difference-in-difference-in-differences estimations, with the treatment defined as steep increases in aid for infrastructure since a distinct change in donor behavior in 2005. Mitigating endogeneity concerns in this way, we consistently find aid for infrastructure to be ineffective in improving the recipient countries' endowment with infrastructure. This finding holds not only for an encompassing index of economic infrastructure, but also for sub-indices of infrastructure in transportation, communication, energy, and finance.

Suggested Citation

  • Julian Donaubauer & Peter Nunnenkamp, 2016. "Is Aid for Infrastructure Effective? A Difference-in-Difference-in-Differences Approach," Economics Bulletin, AccessEcon, vol. 36(2), pages 857-870.
    • Handle: RePEc:ebl:ecbull:eb-16-00241
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    Cited by:

    1. Tii N. Nchofoung & Simplice A. Asongu & Vanessa S. Tchamyou, 2024. "Effect of women’s political inclusion on the level of infrastructures in Africa," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(2), pages 1181-1202, April.
    2. Tii N. Nchofoung & Simplice A. Asongu & Vanessa S. Tchamyou, 2022. "Effect of women’s political inclusion on the level of infrastructures in Africa," Working Papers of The Association for Promoting Women in Research and Development in Africa (ASPROWORDA). 22/004, The Association for Promoting Women in Research and Development in Africa (ASPROWORDA).
    3. Julian Donaubauer & Dierk Herzer & Peter Nunnenkamp, 2019. "The Effectiveness of Aid under Post-Conflict Conditions: A Sector-Specific Analysis," Journal of Development Studies, Taylor & Francis Journals, vol. 55(4), pages 720-736, April.
    4. Axel Dreher & Valentin F. Lang & Sebastian Ziaja, 2017. "Foreign Aid in Areas of Limited Statehood," CESifo Working Paper Series 6340, CESifo.

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    JEL classification:

    • F3 - International Economics - - International Finance

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