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The Dynamics of Aid and Political Rights

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  • David Fielding

    ()
    (Department of Economics, University of Otago)

Abstract

Several existing papers explore the extent to which the cross-country variation in measures of democracy and political rights can be explained by the cross-country variation in foreign aid inflows. Using panel data, we explore the extent to which the variation over time in such measures can be explained by changes in aid inflows, thus providing direct evidence on the impact of innovations in donor policy, and distinguishing between the short-run and long-run effects of changes in aid. Our results are very different from those based on cross-country variation in aid inflows. We find evidence of large differences between the effect of aggregate aid and the effect of aid for political reform, and between the effects in countries at different stages of political development. There is no evidence that aid intended for political reform has achieved its objective, and in some countries it may be counter-productive. However, aggregate aid can have a beneficial effect on political rights.

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File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_1102.pdf
File Function: This version, 2011
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Bibliographic Info

Paper provided by University of Otago, Department of Economics in its series Working Papers with number 1102.

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Length: 30 pages
Date of creation: Apr 2011
Date of revision: Apr 2011
Handle: RePEc:otg:wpaper:1102

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Related research

Keywords: Aid; political rights; dynamic panel model;

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References

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  1. David Fielding, 2008. "Health Aid and Governance in Developing Countries," Working Papers 0809, University of Otago, Department of Economics, revised Nov 2008.
  2. Hannes Öhler & Peter Nunnenkamp & Axel Dreher, 2010. "Does Conditionality Work? A Test for an Innovative US Aid Scheme," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 34, Courant Research Centre PEG.
  3. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  4. David Str�mberg, 2007. "Natural Disasters, Economic Development, and Humanitarian Aid," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 199-222, Summer.
  5. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  6. Abdiweli M. Ali & Hoden Said Isse, 2003. "Determinants of Economic Corruption: A Cross-Country Comparison," Cato Journal, Cato Journal, Cato Institute, vol. 22(3), pages 449-466, Winter.
  7. Busse, Matthias & Gröning, Steffen, 2009. "Does foreign aid improve governance?," Economics Letters, Elsevier, vol. 104(2), pages 76-78, August.
  8. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
  9. Tavares, Jose, 2003. "Does foreign aid corrupt?," Economics Letters, Elsevier, vol. 79(1), pages 99-106, April.
  10. Monica Escaleras & Nejat Anbarci & Charles Register, 2007. "Public sector corruption and major earthquakes: A potentially deadly interaction," Public Choice, Springer, vol. 132(1), pages 209-230, July.
  11. Sarantis Kalyvitis & Irene Vlachaki, 2010. "Democratic Aid And The Democratization Of Recipients," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 188-218, 04.
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