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Aid, Growth and Democracy

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  • J. Svensson

Abstract

To the extent that aid is justified by the benefits to the recipient, rather than to the donor, it might be reasonably judged on two criteria: growth and poverty-alleviation. We study the first of these criteria. We find that the long-run growth impact of aid is conditional on the degree of political and civil liberties in the recipient country. Aid has a positive impact on growth in countries with an institutionalized check on governmental power; that is, in more democratic countries. The data suggest, however, that if this is not the case, aid will be used to satisfy the government's own non-productive goals. We also find that aid on average is not channeled to more democratic countries, even though there are large cross-country differences between major donors. Copyright 1999 Blackwell Publishers Ltd..

Suggested Citation

  • J. Svensson, 1999. "Aid, Growth and Democracy," Economics and Politics, Wiley Blackwell, vol. 11(3), pages 275-297, November.
  • Handle: RePEc:bla:ecopol:v:11:y:1999:i:3:p:275-297
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