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The reality about aid and governance: the threshold theory

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  • Jaouadi, Saïd

Abstract

The aim of this survey is to explain the real impact of aid on governance in the developing countries: including the subsahara and the MENA region during the period 1990-2004 by using the “threshold theory”. Stephen Knack proved that foreign aid had a harmful impact on the governance of the developing countries. But, in this study we used a new econometric approach to test the existence of a threshold and to determine its value. This methodology allowed us to find interesting results in the relation between aid and governance, in the short and in the long run.

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File URL: http://mpra.ub.uni-muenchen.de/33387/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33387.

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Date of creation: 10 Feb 2011
Date of revision: 01 Apr 2011
Handle: RePEc:pra:mprapa:33387

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Keywords: foreign aid; governance; threshold; institutions;

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  1. Charles C. Chang & Eduardo Fernández-Arias & Luis Servén, 1998. "Measuring Aid Flows: A New Approach," IDB Publications 6447, Inter-American Development Bank.
  2. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, vol. 68(3), pages 575-604, May.
  3. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
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