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Foreign Aid and the Culture of Contracting

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  • Christopher J Coyne

    (Department of Economics, George Mason University, MS 3G4, Fairfax, VA, 22030, USA.)

  • Claudia R Williamson

    (Department of Finance and Economics, Mississippi State University, Box 9580, 312 F McCool Hall, Mississippi State, Mississippi, 39762-9580, USA.)

Abstract

We analyze the relationship between foreign aid and the “culture of contracting.” Contracting culture refers to cultural characteristics — trust, respect, level of self-determination, and level of obedience — which allow for impersonal exchange. Theoretically, aid may affect the culture of contracting for better or worse. We empirically analyze this possibility and find that aid generates negative effects on the culture of contracting. The less aid a country receives, the more likely it is to possess a stronger contracting culture. We view our results as identifying another potential unintended consequence of foreign intervention where aid undermines development potential instead of facilitating it.

Suggested Citation

  • Christopher J Coyne & Claudia R Williamson, 2015. "Foreign Aid and the Culture of Contracting," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 41(1), pages 102-125, January.
    • Handle: RePEc:pal:easeco:v:41:y:2015:i:1:p:102-125
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    Cited by:

    1. Skarbek, Emily C., 2016. "Aid, ethics, and the Samaritan's dilemma: strategic courage in constitutional entrepreneurship," Journal of Institutional Economics, Cambridge University Press, vol. 12(2), pages 371-393, June.
    2. Danko Tarabar & Joshua C. Hall, 2016. "Explaining the worldwide decline in the length of mandatory military service, 1970–2010," Public Choice, Springer, vol. 168(1), pages 55-74, July.
    3. Danko Tarabar & Joshua C. Hall, 2015. "Explaining the Worldwide Decline in Military Conscription: 1970-2010," Working Papers 15-30, Department of Economics, West Virginia University.

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