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Does Aid Reduce Inequality? Evidence for Latin America

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  • David Castells-Quintana

    (AQR-IREA. Universidad de Barcelona, Barcelona)

  • José María Larrú

    (Universidad CEU San Pablo, Madrid)

Abstract

During the last two decades there has been an intense debate over the efficacy and efficiency of international aid. The debate has focused on the performance of beneficiary countries in terms of economic growth. Yet little attention has been paid to the role of aid in income distribution within receiving countries, despite the fact that reducing inequality is an explicit aim of international aid. In this article, we analyse the role of aid in the evolution of income distribution over the last two decades for 18 Latin American countries. While Latin America is the most unequal region of the world, it includes some of the countries currently leading the reduction of inequality at the global level. The region is also currently losing a significant amount of aid disbursement. The main finding of our work, after controlling for several relevant variables, is that there has been a significant effect of international aid on reducing income inequality in Latin America.

Suggested Citation

  • David Castells-Quintana & José María Larrú, 2015. "Does Aid Reduce Inequality? Evidence for Latin America," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 27(5), pages 826-849, December.
    • Handle: RePEc:pal:eurjdr:v:27:y:2015:i:5:p:826-849
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    Citations

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    Cited by:

    1. Isaac Doku, 2022. "Are Developing Countries Using Climate Funds for Poverty Alleviation? Evidence from Sub-Saharan Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 3026-3049, December.
    2. David Castells-Quintana & Raul Ramos & Vicente Royuela, 2015. "Income inequality in European Regions: Recent trends and determinants," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 35(2), pages 123-146, October.
    3. Kotsadam, Andreas & Østby, Gudrun & Rustad, Siri Aas & Tollefsen, Andreas Forø & Urdal, Henrik, 2018. "Development aid and infant mortality. Micro-level evidence from Nigeria," World Development, Elsevier, vol. 105(C), pages 59-69.
    4. Adams, Samuel & Klobodu, Edem Kwame Mensah, 2017. "Capital flows and the distribution of income in sub-Saharan Africa," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 169-178.
    5. Gravina, Antonio Francesco & Lanzafame, Matteo, 2021. "Finance, globalisation, technology and inequality: Do nonlinearities matter?," Economic Modelling, Elsevier, vol. 96(C), pages 96-110.

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