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Aid Effectiveness: The Role of the Local Elite

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  • Luis Angeles
  • Kyriakos C. Neanidis

Abstract

We study the importance of the local elite as a determinant of the effectiveness of foreign aid in developing countries. An "extractive" elite will misuse aid ?ows, an issue that is probably as old as foreign aid itself. We proxy for the existence of an "extractive" elite by using an historically determined variable: the percentage of European settlers in colonial times. Our econometric results clearly show the importance of this factor and its robustness to a wide set of alternative aid-growth relationships advanced in the literature.

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Paper provided by Economics, The Univeristy of Manchester in its series Centre for Growth and Business Cycle Research Discussion Paper Series with number 80.

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Length: 37 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:man:cgbcrp:80

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