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Does aid help improve economic institutions ?

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Author Info
Coviello, Decio
Islam, Roumeen

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Abstract

Aid is expected to promote better living standards by raising investment and growth. But aid may also affect institutions directly. In theory, these effects may or may not work in the same direction as those on investment. The authors examine the effect of aid on economic institutions and find that aid has neither a positive nor a negative impact on existing measures of economic institutions. They find the results using pooled data for non-overlapping five-year periods, confirmed by pooled annual regressions for a large panel of countries and by pure cross-section regressions. The authors explicitly allow for time invariant effects that are country specific and find the results to be robust to model specifications, estimation methods, and different data sets.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3990.

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Date of creation: 01 Aug 2006
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Handle: RePEc:wbk:wbrwps:3990

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Keywords: Development Economics&Aid Effectiveness; Public Institution Analysis&Assessment; Economic Theory&Research; Economic Policy; Institutions and Governance; School Health;

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  32. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
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  36. Michael A. Clemens & Steven Radelet & Rikhil Bhavnani, 2004. "Counting chickens when they hatch: The short-term effect of aid on growth," International Finance 0407010, EconWPA. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bandeira, Pablo, 2009. "El desarrollo institucional en el contexto de la ineficacia de la ayuda: ¿qué podemos hacer?
    [Promoting institutional development in the context of actual aid ineffectiveness: what can we do?]    ," MPRA Paper 13372, University Library of Munich, Germany. [Downloadable!]
  2. Thierry Kangoye, 2008. "Instability from trade and democracy: the long-run effect of aid," Post-Print hal-00331902_v1, HAL. [Downloadable!]
  3. Thierry Kangoye, 2008. "Instability from trade and democracy: the long-run effect of aid," Economics Bulletin, Economics Bulletin, vol. 6(41), pages 1-16. [Downloadable!]
  4. Kenny, Charles, 2006. "What is effective aid? How would donors allocate It?," Policy Research Working Paper Series 4005, The World Bank. [Downloadable!]
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