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The Effectiveness of Aid in Improving Regulations: Empirical evidence and the drivers of change in Rwanda

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Author Info

  • Busse, Matthias

    (Ruhr-University Bochum, Faculty of Management and Economics, Germany)

  • Hoekstra, Ruth

    (Hamburg Institute of International Economics (HWWI), Germany)

  • Osei, Robert

    (Institute of Statistical, Social and Economic Research (ISSER), Ghana)

Abstract

The paper assesses the impact of foreign aid on the change in the quality of regulations, and identifies the drivers of this change in a case study on Rwanda. In the empirical analysis, we find that highly targeted Aid for Business has a significantly positive impact on regulations across developing countries, but we do not find any effects for overall aid or aid directed at broad governance areas. In the country case study, we depart from Rwanda's excellent regulatory performance to explain how aid is effective in changing the regulatory environment, driven by the country’s strong political leadership and its singular institutional history.

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Bibliographic Info

Paper provided by Institut fuer Entwicklungsforschung und Entwicklungspolitik, Ruhr-Universitaet Bochum in its series IEE Working Papers with number 198.

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Length: 28 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:bom:ieewps:198

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Web page: http://www.development-research.org/
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Keywords: Foreign aid; Governance; Business regulations; Rwanda;

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  1. Kilby, Christopher, 2004. "Aid and Regulation," Vassar College Department of Economics Working Paper Series, Vassar College Department of Economics 65, Vassar College Department of Economics.
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