IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Foreign Aid and Market-Liberalizing Reform

  • JAC C. HECKELMAN
  • STEPHEN KNACK

Market-oriented economic policies have been strongly linked to faster rates of economic growth. Foreign aid is often provided in part to encourage market-oriented reforms. We analyse the impact of aid on market-liberalizing policy reform, correcting for its potential endogeneity. Results indicate that higher aid slowed reform over the 1980-2000 period, as measured by a broad index of policies. Disaggregating policy into five areas, aid is associated with slower reform in some policy areas but not in others. Disaggregating by decade, the adverse impact of aid on policy reform is much more pronounced for the 1980s than for the 1990s. Copyright (c) The London School of Economics and Political Science 2007.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0335.2007.00623.x
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 75 (2008)
Issue (Month): 299 (08)
Pages: 524-548

as
in new window

Handle: RePEc:bla:econom:v:75:y:2008:i:299:p:524-548
Contact details of provider: Postal:
Houghton Street, London WC2A 2AE

Phone: +44 (020) 7405 7686
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0013-0427

More information through EDIRC

Order Information: Web: http://www.blackwellpublishing.com/subs.asp?ref=0013-0427

References listed on IDEAS
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.:

as in new window
  1. Cukierman, Alex & Tommasi, Mariano, 1998. "When Does It Take a Nixon to Go to China?," American Economic Review, American Economic Association, vol. 88(1), pages 180-97, March.
  2. Alesina, Alberto, et al, 2003. "Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-94, June.
  3. Stijn Claessens & Luc Laeven, 2003. "Financial Development, Property Rights, and Growth," Journal of Finance, American Finance Association, vol. 58(6), pages 2401-2436, December.
  4. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  5. William Easterly, 2002. "The cartel of good intentions: The problem of bureaucracy in foreign aid," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(4), pages 223-250.
  6. Feyzioglu, Tarhan & Swaroop, Vinaya & Zhu, Min, 1998. "A Panel Data Analysis of the Fungibility of Foreign Aid," World Bank Economic Review, World Bank Group, vol. 12(1), pages 29-58, January.
  7. William Easterly, 2002. "What did Structural Adjustment Adjust? The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans," Working Papers 11, Center for Global Development.
  8. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
  9. repec:hrv:faseco:4553020 is not listed on IDEAS
  10. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, March.
  11. Boockmann, Bernhard & Dreher, Axel, 2003. "The contribution of the IMF and the World Bank to economic freedom," European Journal of Political Economy, Elsevier, vol. 19(3), pages 633-649, September.
  12. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
  13. Gene M. Grossman (ed.), 0. "Economic Growth," Books, Edward Elgar Publishing, volume 0, number 553, May.
  14. Persson, Torsten & Tabellini, Guido, 2002. "Do constitutions cause large governments? Quasi-experimental evidence," European Economic Review, Elsevier, vol. 46(4-5), pages 908-918, May.
  15. Alesina, Alberto & Drazen, Allan, 1991. "Why Are Stabilizations Delayed?," American Economic Review, American Economic Association, vol. 81(5), pages 1170-88, December.
  16. Tony Killick, 2004. "Politics, Evidence and the New Aid Agenda," Development Policy Review, Overseas Development Institute, vol. 22(1), pages 5-29, 01.
  17. Heckelman, Jac C & Stroup, Michael D, 2000. "Which Economic Freedoms Contribute to Growth?," Kyklos, Wiley Blackwell, vol. 53(4), pages 527-44.
  18. Loayza, Norman V. & Soto, Raimundo, 2004. "On the measurement of market-oriented reforms," Policy Research Working Paper Series 3371, The World Bank.
  19. repec:cto:journl:v:18:y:1998:i:2:p: is not listed on IDEAS
  20. Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
  21. Berggren, Niclas, 2003. "The Benefits of Economic Freedom: A Survey," Ratio Working Papers 4, The Ratio Institute.
  22. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
  23. Hansen, Henrik & Tarp, Finn, 1999. "Aid Effectiveness Disputed," MPRA Paper 62290, University Library of Munich, Germany.
  24. Omotunde Johnson, 2004. "How will good economic policy environments emerge in Africa?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 7(3), pages 151-164.
  25. Stanley Fischer, 1993. "The Role of Macroeconomic Factors in Growth," NBER Working Papers 4565, National Bureau of Economic Research, Inc.
  26. Dollar, David & Svensson, Jakob, 2000. "What Explains the Success or Failure of Structural Adjustment Programmes?," Economic Journal, Royal Economic Society, vol. 110(466), pages 894-917, October.
  27. W. Kenn Farr & Richard A. Lord & J. Larry Wolfenbarger, 1998. "Economic Freedom, Political Freedom, and Economic Well-Being: A Causality Analysis," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 247-262, Fall.
  28. John R. Hanson, 2003. "Proxies in the New Political Economy: Caveat Emptor," Economic Inquiry, Western Economic Association International, vol. 41(4), pages 639-646, October.
  29. Randall G. Holcombe, 2001. "Public choice and economic growth," Chapters, in: The Elgar Companion to Public Choice, chapter 29 Edward Elgar Publishing.
  30. de Haan, Jakob & Sturm, Jan-Egbert, 2003. "Does more democracy lead to greater economic freedom? New evidence for developing countries," European Journal of Political Economy, Elsevier, vol. 19(3), pages 547-563, September.
  31. Williamson, John, 2000. "What Should the World Bank Think about the Washington Consensus?," World Bank Research Observer, World Bank Group, vol. 15(2), pages 251-64, August.
  32. Hsieh, Chang-Tai, 2000. "Bargaining over reform," European Economic Review, Elsevier, vol. 44(9), pages 1659-1676, October.
  33. John W. Dawson, 2001. "Causality in the Freedom-Growth Relationship," Working Papers 01-04, Department of Economics, Appalachian State University.
  34. Juliana Bambaci & Tamara Saront & Mariano Tommasi, 2002. "The Political Economy of Economic Reforms in Argentina," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(2), pages 75-88.
  35. Loayza, Norman V. & Oviedo, Ana Maria & Serven, Luis, 2005. "Regulation and macroeconomic performance," Policy Research Working Paper Series 3469, The World Bank.
  36. Roger B. Myerson, 1998. "Theoretical Comparisons of Electoral Systems," Discussion Papers 1261, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  37. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, Southern Economic Association, vol. 68(2), pages 310-329, October.
  38. Steven B. Caudill & Fernando C. Zanella & Franklin G. Mixon, Jr., 2000. "Is Economic Freedom One Dimensional? A Factor Analysis of Some Common Measures of Economic Freedom," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 25(1), pages 17-40, June.
  39. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  40. Stefan G. Koeberle, 2003. "Should Policy-Based Lending Still Involve Conditionality?," World Bank Research Observer, World Bank Group, vol. 18(2), pages 249-273.
  41. Carlsson, Fredrik & Lundström, Susanna, 2001. "Economic Freedom and Growth:Decomposing the Effects," Working Papers in Economics 33, University of Gothenburg, Department of Economics.
  42. Torsten Persson & Guido Tabellini, 2004. "Constitutions and Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 75-98, Winter.
  43. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
  44. Ian Vasquez, 1998. "Official Assistance, Economic Freedom, and Policy Change: Is Foreign Aid Like Champagne?," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 275-286, Fall.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bla:econom:v:75:y:2008:i:299:p:524-548. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.